Pakistan’s Domestic Gas Production to Halve by 2034

Pakistan's gas sector is facing growing financial and supply pressures as domestic gas production continues to decline, LNG demand remains subdued and gas distribution businesses struggle with liquidity constraints.

Key points

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• Pakistan could gain greater supply diversification from the proposed Turkmenistan Afghanistan Pakistan India and Iran Pakistan gas pipelines over the longer term.
• The financial health of the two major gas distribution firms, Sui Northern Gas Pipelines Ltd.
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• The administration, with backing from the World Bank, is considering a major restructuring of SNGPL and SSGCL.

According to a new study by Pakistan's Credit Rating Agency (PACRA), indigenous gas production is projected to fall from regarding 2, 634 million cubic feet per day in fiscal year 2024 to around 1, 266 million cubic feet per day by fiscal year 2034. Consequently, the share of domestic gas in Pakistan's total supply is projected to drop from concerning 73 percent to only 25 percent over the same period, increasing the sector's reliance on imported energy.

While the proposed structural reforms could improve the sector's long term efficiency but are unlikely to resolve its financial challenges in the near term.

LNG demand has additionally weakened sharply. LNG imports fell from regarding 6 million tonnes to approximately 3.7 million tonnes during the first nine months of fiscal year 2026 as industrial and power sector consumers increasingly shifted toward solar energy and other alternatives. The trend has reduced demand for imported gas even as domestic production continues to decline.

Pakistan could gain greater supply diversification from the proposed Turkmenistan Afghanistan Pakistan India and Iran Pakistan gas pipelines over the longer term. Nevertheless, continued delays surrounding both projects mean they are unlikely to provide a reliable solution to the country's immediate gas supply requirements.

Notably, the financial health of the two major gas distribution firms, Sui Northern Gas Pipelines Ltd. And Sui Southern Gas Business Ltd., remains another major concern. Delays in tariff adjustments, subdued recoveries and rising working capital requirements are putting further pressure on their liquidity and could growth their reliance on borrowing.

For context, the LPG market offers a more positive picture. While imports declined 12 percent year over year to approximately 1.5 million tonnes, local LPG production rose concerning 15.5 percent in fiscal year 2026. Extra domestic production capacity of concerning 136, 000 tonnes annually could further strengthen local supplies. Nevertheless, the government's fiscal year 2027 import target of concerning 1.6 million tonnes indicates that Pakistan will remain significantly dependent on imported LPG.

LPG rates and industry margins will remain exposed to international factors, including Saudi Aramco's contract rate, geopolitical developments, freight costs and fluctuations in the rupee dollar exchange rate. This leaves the segment vulnerable to external cost pressures despite the recent rise in domestic production.

Meanwhile, the administration, with backing from the World Bank, is considering a major restructuring of SNGPL and SSGCL. The proposed model would separate their transmission and distribution operations and create one National Gas Transmission Firm alongside four provincial distribution businesses.

Notably, the reform package would additionally introduce a new multiyear tariff mechanism, third party access to gas pipelines and a gradual opening of gas trading to private sector businesses.

Under the proposal, private players could potentially receive regarding 20 percent of gas volumes during the first year. According to the PACRA study, these measures could improve cost transparency, reduce unaccounted for gas losses and strengthen collections, helping address the sector's Rs. 3.4 trillion circular debt.

Nevertheless, the study cautions that the benefits would take time to emerge. Resistance from existing gas firms and delays in implementing the restructuring could limit the impact of the reforms. The new structure would additionally change how SNGPL and SSGCL generate and report margins, making comparisons with their historical profitability less meaningful. Stay Connected with ProPakistani.

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For now, pakistan's Domestic Gas Production to Halve by 2034 remains the part of the story worth watching, and further updates are likely as more details are confirmed.