Energy Strategy : LNG imports secured, IMF support sought for refineries upgradation

ISLAMABAD: The Petroleum Division is optimistic about receiving a positive response from the International Monetary Fund (IMF) regarding concessions aimed at facilitating the upgradation of local oil refineries.
During a recent meeting with the IMF, Federal Minister for Petroleum and Natural Resources, Ali Pervaiz Malik, adopted a firm stance, warning that failure to modernize refineries would continue to impose hardships on the public.
Responding to a question, the minister said the government is actively negotiating with the IMF to secure a sales tax exemption for refineries in the upcoming federal budget. The proposed relief is intended to support refinery upgradation, and the minister expressed hope for a favorable outcome.
He also hinted at possible relief for consumers in the upcoming domestic gas tariff adjustment scheduled for July 1, 2026, despite demands by gas utilities for an increase in tariffs.
The minister further revealed that the Petroleum Division has submitted a proposal to Prime Minister Shehbaz Sharif for establishing strategic oil reserves to safeguard the country’s energy supply against geopolitical risks. The proposal builds on earlier research conducted during the Musharraf era in collaboration with the Pakistan Institute of Development Economics (PIDE).
In addition, a comprehensive set of proposals addressing key challenges in the oil and gas sector has been submitted to the Finance Division for consideration in the forthcoming federal budget.
Meanwhile, the government has secured three liquefied natural gas (LNG) cargoes from Qatar under long-term agreements, along with one cargo from the spot market, to meet rising energy demand during the summer.
In this regard, Pakistan LNG Limited (PLL) on Wednesday invited bids for the supply of one LNG cargo on a Delivered Ex-Ship (DES) basis at Port Qasim, Karachi, for delivery on June 6–7, 2026.
The petroleum minister, along with the Secretary Petroleum Division, spokesperson, and managing directors of Oil and Gas Development Company Limited (OGDCL) and Pakistan State Oil (PSO), also held an interaction session with media representatives to brief them on recent developments.
Officials stated that, to reduce reliance on costly imported LNG, indigenous gas is being diverted to power plants at a subsidized rate of Rs200 per MMBtu compared to the standard price of around Rs3,500 per MMBtu. A summary to formalize this pricing mechanism is being prepared for submission to the Economic Coordination Committee (ECC).
At the request of the Power Division, the government has also allowed LNG imports on a full cost-recovery basis to ensure uninterrupted electricity supply. LNG shipments under long-term contracts with Qatar remain relatively economical as they are procured on a Cost and Freight (CFR) basis.
Following the recent Middle East conflict, the government has managed to restore around 400 million cubic feet per day (mmcfd) of gas production that had been disrupted due to technical and security challenges affecting major exploration and production companies, including OGDCL, Pakistan Petroleum Limited (PPL), and Mari Petroleum.