Tariq Saeedi
In the first part of this report, we established that TAPI is no merely an idea, it is an ideology. Under this new paradigm, we decided to start with two basic questions:
- Among the three major gas supply options for Pakistan – TAPI (Turkmenistan-Afghanistan-Pakistan-India) gas pipeline, IPI (Iran-Pakistan-India) gas pipeline, and Qatar LNG – which one is the best for Pakistan?
- What is the natural gas supply-demand situation in Pakistan?
Both of these questions must be answered together for the sake of clarity. In this part of the series, we will also deal with a supplementary question: Can the consumers in Pakistan pay the TAPI price without increase in their current tariffs?
At present, the Qatar LNG is the main source of imported natural gas in Pakistan. On the surface it may look that the Qatar LNG is meeting the demand-supply gap in Pakistan.
However, in actuality, there is crisis-level shortage of gas in Pakistan. There is mismatch between the reported figures and the ground situation.
According to the winter schedule, currently in force, the natural gas in the provinces of Punjab and Khyber Pakhtunkhwa and capital Islamabad, is not available to the consumers for 15 hours a day.
In Quetta and the Balochistan province the gas load shedding exceeds 13 hours every day. In Karachi, the megapolis home to nearly 10% of the population of Pakistan, there is no gas from 9PM to 6AM.
Qatar LNG and Pipeline Options
Pakistan is currently importing liquefied natural gas (LNG) from Qatar under two long-term contracts managed by Pakistan State Oil (PSO) with QatarEnergy.
Volume of LNG Purchases from Qatar
- Annual Basis: The total contracted volume is 6.75 million metric tons per annum (MTPA), comprising 3.75 MTPA from the first contract and 3 MTPA from the second. This equates to approximately 9.3 billion cubic meters (bcm) of natural gas equivalent per year (using a standard conversion factor of about 1.38 bcm per million tonnes of LNG).
- Monthly Basis: This breaks down to roughly 0.56 million metric tons per month, or about 9 standard-sized cargoes (assuming an average cargo of ~0.065 million tonnes).
- Total Volume Across All Contracts: The combined annual contracted volume from both active agreements is 6.75 MTPA, as detailed above. Pakistan imports approximately 85-100 cargoes annually from these Qatar contracts out of its total of about 120 LNG cargoes per year, with the remainder from other sources. However, due to a current supply surplus driven by increased renewable energy generation and declining demand, Pakistan is seeking to defer 177 Qatari LNG cargoes between 2025-2031, creating a projected $5.64 billion contract burden. Pakistan has also cancelled 21 Eni LNG cargoes for 2026-2027 and is not importing spot LNG.
Duration of Contract Validity
- First Contract: 15 years, from February 2016 to January 2031, with a price review or termination option after 10 years (opening in 2026). Pakistan is actively planning to renegotiate terms when this window opens.
- Second Contract: 10 years, from January 2022 to December 2032. Pakistan is actively seeking to renegotiate terms, including price and deferrals, due to economic pressures and oversupply.
Share of Pakistan’s Natural Gas Demand Met by Qatar LNG
Pakistan’s total annual natural gas consumption is approximately 36-38 bcm (or ~1.27-1.34 trillion cubic feet), though consumption has been declining in recent years. Domestic production covers about 28 bcm per year, leaving a gap filled primarily by imports. The 9.3 bcm equivalent from Qatar LNG represents roughly 24-26% of Pakistan’s overall natural gas demand (or most of the imported portion, as Qatar supplies the bulk of LNG imports).
For FY 2024-25, total gas demand is expected to remain around 3,500 MMcf/d (approximately 36 bcm annually), with LNG consumption at 914 MMcf/d – the lowest in five years. The decline is attributed to increased renewable energy capacity and economic factors constraining industrial demand.
Price Comparison: Qatar LNG vs. Pipeline Gas Offers from Iran (IPI) and Turkmenistan (TAPI)
Qatar LNG Pricing: Qatar LNG prices are linked to Brent crude oil via a slope percentage, making them variable. The weighted average slope across the contracts is about 11.96% (13.37% for the 3.75 MTPA contract and 10.2% for the 3 MTPA contract). As of early November 2025, with Brent at approximately $63.66 per barrel, this translates to an estimated $7.61 per million British thermal units (MMBtu) (calculation: $63.66 × 0.1196 = $7.61). Note: Actual delivered prices may include additional costs like shipping and regasification.
- Iran-Pakistan-India (IPI) Pipeline Offer: Historical pricing from 2007 indicated $4.93/MMBtu at $60/bbl crude, suggesting an approximately 8.2% slope formula. More recent discussions have referenced higher fixed prices (around $11/MMBtu), though these are not confirmed by current sources and may reflect earlier negotiations at higher oil price environments. The pipeline remains stalled, with proposed volume for Pakistan at ~7.8 bcm/year (or 750–2,100 MMcf/d initial capacity). Pakistan is constructing an 80-km segment amid ongoing negotiations.
- Turkmenistan-Afghanistan-Pakistan-India (TAPI) Pipeline Offer: The proposed price is $7.50 per MMBtu for Pakistan. This is roughly comparable to current Qatar LNG levels but could be 5–10% higher than spot LNG in some scenarios (per older assessments). The pipeline is under construction (Turkmenistan segment complete, Afghanistan ongoing), with Pakistan’s allocated share at 14 bcm/year (42% of the total 33 bcm/year capacity). Without India’s participation, Pakistan would face a $500 million annual transit fee to Afghanistan, and the project would only be economical if India participated and paid $700-800 million/year in transit fees to Pakistan, creating potential sustainability issues.
Qatar LNG is currently priced at approximately $7.61/MMBtu (based on November 2025 Brent prices), making it competitive with TAPI’s proposed $7.50/MMBtu and potentially more attractive than IPI’s historical pricing formulas.
However, Qatar LNG’s oil-linked nature means it fluctuates with Brent prices. Pipeline options like IPI and TAPI could provide more price stability but face significant geopolitical, construction, and funding hurdles. Pakistan’s immediate challenge is managing its LNG oversupply situation while preparing for contract renegotiations with Qatar in 2026.
Meanwhile, we should look at Brent projections because if the price per barrel reaches USD 65 or exceeds it, the TAPI would clearly be the best option for Pakistan. For now, Qatar LNG could be cheaper but the situation will change in about a year.
Brent Crude Oil Forecasts & Qatar LNG vs TAPI Price Comparison
Analysis Period: January 2026 – December 2027
Section 1: Quarterly Brent Crude Oil Price Forecasts
EIA Short-Term Energy Outlook (September 2025)
| Quarter | Brent Price ($/bbl) | Qatar LNG Cost ($/MMBtu)* | TAPI Fixed Price ($/MMBtu) | Price Difference | Advantage |
| 2026 | |||||
| Q1 2026 | $49.97 | $5.98 | $7.50 | -$1.52 | Qatar LNG cheaper |
| Q2 2026 | $49.67 | $5.94 | $7.50 | -$1.56 | Qatar LNG cheaper |
| Q3 2026 | $52.00 | $6.22 | $7.50 | -$1.28 | Qatar LNG cheaper |
| Q4 2026 | $54.00 | $6.46 | $7.50 | -$1.04 | Qatar LNG cheaper |
| 2026 Average | $51.43 | $6.15 | $7.50 | -$1.35 | Qatar LNG cheaper |
LongForecast Monthly Projections (2026-2027)
| Period | Month | Brent Price ($/bbl) | Qatar LNG Cost ($/MMBtu)* | TAPI Fixed Price ($/MMBtu) | Price Difference | Advantage |
| 2026 | ||||||
| Q1 2026 | January | $66.54 | $7.96 | $7.50 | +$0.46 | TAPI cheaper |
| February | $64.26 | $7.69 | $7.50 | +$0.19 | TAPI cheaper | |
| March | $62.03 | $7.42 | $7.50 | -$0.08 | Qatar LNG cheaper | |
| Q2 2026 | April | $65.88 | $7.88 | $7.50 | +$0.38 | TAPI cheaper |
| May | $69.35 | $8.29 | $7.50 | +$0.79 | TAPI cheaper | |
| June | $72.85 | $8.71 | $7.50 | +$1.21 | TAPI cheaper | |
| Q3 2026 | July | $68.33 | $8.17 | $7.50 | +$0.67 | TAPI cheaper |
| August | $67.57 | $8.08 | $7.50 | +$0.58 | TAPI cheaper | |
| September | $66.74 | $7.98 | $7.50 | +$0.48 | TAPI cheaper | |
| Q4 2026 | October | $68.31 | $8.17 | $7.50 | +$0.67 | TAPI cheaper |
| November | $68.64 | $8.21 | $7.50 | +$0.71 | TAPI cheaper | |
| December | $68.97 | $8.25 | $7.50 | +$0.75 | TAPI cheaper | |
| 2027 | ||||||
| Q1 2027 | January | $70.98 | $8.49 | $7.50 | +$0.99 | TAPI cheaper |
| February | $66.97 | $8.01 | $7.50 | +$0.51 | TAPI cheaper | |
| March | $62.97 | $7.53 | $7.50 | +$0.03 | TAPI cheaper | |
| Q2 2027 | April | $62.00 | $7.42 | $7.50 | -$0.08 | Qatar LNG cheaper |
| May | $60.48 | $7.23 | $7.50 | -$0.27 | Qatar LNG cheaper | |
| June | $58.97 | $7.05 | $7.50 | -$0.45 | Qatar LNG cheaper | |
| Q3 2027 | July | $59.59 | $7.13 | $7.50 | -$0.37 | Qatar LNG cheaper |
Section 2: Annual Forecasts from Major Institutions
| Institution | Year | Brent Forecast ($/bbl) | Qatar LNG Cost ($/MMBtu)* | TAPI Fixed Price ($/MMBtu) | Price Difference | Advantage |
| EIA | 2026 | $51.43 | $6.15 | $7.50 | -$1.35 | Qatar LNG cheaper |
| J.P. Morgan | 2026 | $58.00 | $6.94 | $7.50 | -$0.56 | Qatar LNG cheaper |
| Standard Chartered | 2026 | $63.50 | $7.59 | $7.50 | +$0.09 | TAPI cheaper |
| BMI | 2026 | $71.00 | $8.49 | $7.50 | +$0.99 | TAPI cheaper |
| BMI | 2027 | $70.00 | $8.37 | $7.50 | +$0.87 | TAPI cheaper |
| Standard Chartered | 2027 | $67.00 | $8.01 | $7.50 | +$0.51 | TAPI cheaper |
Key Findings for TAPI Justification:
- Short-term (2026): According to EIA’s conservative forecast, Qatar LNG would be cheaper throughout 2026, with prices ranging from $5.94-$6.46/MMBtu versus TAPI’s fixed $7.50/MMBtu.
- Mid-term (Late 2026-2027): LongForecast predicts Brent will rise above $62-63/bbl from Q2 2026 onwards, making TAPI progressively more competitive. From April 2026 through March 2027, TAPI would be cheaper in 9 out of 12 months.
- Price Volatility Risk: Qatar LNG’s oil-linked pricing exposes Pakistan to Brent crude volatility. The forecast range shows potential swings from $49.67/bbl (EIA Q2 2026) to $72.85/bbl (LongForecast June 2026), creating significant uncertainty.
- Break-even Point: TAPI becomes cheaper than Qatar LNG when Brent exceeds approximately $62.70/bbl (using 11.96% slope). Most institutions forecast Brent will exceed this level in 2027.
- Long-term Security: TAPI’s fixed price provides certainty and protection against oil price spikes. If Brent returns to $70-80/bbl (historical average), Qatar LNG would cost $8.37-9.57/MMBtu, making TAPI $0.87-2.07/MMBtu cheaper.
- Strategic Hedging: Diversifying between oil-linked (Qatar) and fixed-price (TAPI) sources reduces Pakistan’s exposure to oil market volatility and provides energy security.
Summary for Energy Security Analysis:
Price Competitiveness: While Qatar LNG may be temporarily cheaper in 2026 if oil prices remain subdued, TAPI’s fixed $7.50/MMBtu provides:
- Budget Certainty: No exposure to oil price volatility
- Long-term Value: Protection against future oil price increases
- Risk Mitigation: Hedge against geopolitical events affecting oil markets
- Infrastructure Control: Pipeline ownership reduces supply disruption risks
Recommendation: TAPI should be pursued as a complementary source to Qatar LNG, not as a replacement. The combination provides Pakistan with both competitive pricing (when oil is low) and price stability (when oil is high), strengthening overall energy security.
Calculation Methodology:
* Qatar LNG cost calculated using weighted average slope of 11.96% applied to Brent crude price:
Qatar LNG Cost ($/MMBtu) = Brent Price ($/bbl) × 0.1196
Formula: (3.75 MTPA × 13.37% + 3 MTPA × 10.2%) ÷ 6.75 MTPA = 11.96%
Note: Actual delivered costs may include additional charges for shipping, regasification, and handling. TAPI’s $7.50/MMBtu is the stated wellhead price and may also include additional costs for transit and distribution within Pakistan.
Data Sources: EIA Short-Term Energy Outlook (September 2025), LongForecast.com, S&P Global Commodity Insights, and various institutional forecasts as linked in the tables above.
Pakistan Natural Gas Consumer Categories & TAPI Price Comparison
Analysis of Gas Tariffs and Consumption by Sector (Effective July 1, 2025)
Total Gas Consumption – ~36-38 Billion Cubic Meters (BCM) per year
TAPI Fixed Price – $7.50 Per MMBtu
Exchange Rate – 282.68 PKR per USD (Nov 2025)
TAPI in PKR – 2,120 PKR per MMBtu
Consumer Categories Already Paying TAPI-Equivalent or Higher Prices
Key Findings – Sectors Paying ≥ $7.50/MMBtu (TAPI Price):
- General Industry (19% of consumption, ~6.9 BCM/year): Currently paying Rs 2,300/MMBtu ($8.14), which is 8.5% higher than TAPI. This sector could save $0.64/MMBtu by switching to TAPI gas.
- Captive Power Plants (part of industrial, several BCM/year): Paying Rs 3,500/MMBtu ($12.38), which is 65% higher than TAPI. Could save $4.88/MMBtu with TAPI.
- Commercial Sector (~6% of consumption, ~2.1 BCM/year): Paying Rs 3,900/MMBtu ($13.80), which is 84% higher than TAPI. Could save $6.30/MMBtu.
- Government/Institutional Users: Paying Rs 3,175/MMBtu ($11.23), which is 50% higher than TAPI. Includes hospitals, schools, and government offices.
- CNG Stations (~1.5% of consumption, ~0.5 BCM/year): Paying Rs 3,750/MMBtu ($13.27), which is 77% higher than TAPI. Could save $5.77/MMBtu.
- High-Usage Domestic Consumers (upper slabs): Non-protected households consuming >4 hm³/month pay Rs 4,000-4,200/MMBtu ($14.15-14.86), which is 89-98% higher than TAPI.
Total Volume Already Paying TAPI-Equivalent or Higher:
- Conservative Estimate: At least 9-10 BCM/year (~25-27% of total consumption)
- Sectors Include: General Industry (6.9 BCM), Commercial (2.1 BCM), CNG (0.5 BCM), plus captive power and high-usage residential
- Potential Annual Savings: If these sectors received TAPI gas at $7.50/MMBtu instead of current prices, they could save hundreds of millions of dollars annually
Strategic Implications for TAPI Justification:
1. Price Competitiveness for Key Sectors:
Approximately 25-27% of Pakistan’s gas consumption (9-10 BCM/year) is already being sold at prices equal to or exceeding TAPI’s $7.50/MMBtu. These sectors include:
- General industry bearing the backbone of manufacturing and exports
- Commercial establishments critical for economic activity
- Government institutions providing essential services
- High-consumption residential users
2. Cross-Subsidy Burden:
The current tariff structure shows that industrial and commercial sectors are heavily cross-subsidizing residential and fertilizer sectors. TAPI could provide relief to these burden-bearing sectors while maintaining subsidies for vulnerable groups through other gas sources.
3. Industrial Competitiveness:
Pakistani industries currently pay $8.14/MMBtu (13% above regional competitors) while Indian industries pay lower rates. This makes Pakistani goods less competitive in export markets. TAPI at $7.50/MMBtu would improve industrial competitiveness.
4. Allocation Strategy for TAPI Gas (14 BCM/year):
Recommended Priority Distribution:
- Tier 1 (9-10 BCM): Allocate to industrial, commercial, and CNG sectors already paying ≥$7.50/MMBtu → Immediate cost savings and improved competitiveness
- Tier 2 (3-4 BCM): Supplement power sector (currently paying $4.33/MMBtu) to reduce electricity generation costs → Lower electricity tariffs for all consumers
- Tier 3 (1 BCM): Strategic reserve/peak demand management
5. Economic Justification:
- No Price Shock: Sectors already paying TAPI-equivalent prices face zero adjustment cost
- Immediate Savings: Industrial sector could save ~$0.64/MMBtu × 6.9 BCM = ~$600 million annually
- Commercial Relief: Commercial sector could save ~$6.30/MMBtu × 2.1 BCM = ~$1.8 billion annually
- Manufacturing Boost: Lower energy costs improve export competitiveness and job creation
- Fixed Pricing: Unlike oil-linked Qatar LNG, TAPI provides budget certainty for businesses
6. Political Feasibility:
Since these sectors are already accustomed to higher prices, allocating TAPI gas to them:
- Requires no subsidy burden on government
- Generates immediate business community support
- Demonstrates tangible benefits to key economic stakeholders
- Avoids politically sensitive residential sector price increases
Data Sources and Methodology:
- Gas tariffs effective from July 1, 2025 OGRA notification
- Consumption data from FY 2021-22 official statistics (3,565 MMcfd average = ~37 BCM/year)
- Sector-wise breakdown: Power 30%, Domestic 25%, Fertilizer 24%, Industry 19%
- Exchange rate: 1 USD = 282.68 PKR (November 6, 2025)
- TAPI price: $7.50/MMBtu confirmed
- BCM conversion: 1 MMcfd × 365 days × 0.0283 = ~10.3 BCM per 1,000 MMcfd
Note on Subsidies: The cross-subsidy system means that high-tariff sectors (industrial, commercial, CNG) are overcharged to subsidize low-tariff sectors (protected residential, fertilizer). This creates economic distortions and reduces competitiveness.
Pakistan Gas Consumer Categories and Price Comparison
Table 1: Gas Consumer Categories and Current Prices in Pakistan (Effective July 1, 2025)
| Consumer Category | Price (PKR/MMBTU) | Price (USD/MMBTU) | Monthly Fixed Charges (PKR) | Notes |
| Domestic – Protected | 200 – 350 | 0.72 – 1.26 | 600 | Up to 90 cubic meters/month |
| Domestic – Non-Protected | 500 – 4,200 | 1.80 – 15.12 | 1,500 | General households |
| Domestic – High Usage | 500 – 4,200 | 1.80 – 15.12 | 3,000 | More than 1.5 MMBTU/month |
| Commercial | 3,900 | 14.04 | Varies | Hotels, restaurants, shops, offices |
| Special Roti Tandoor | 110 – 700 | 0.40 – 2.52 | Varies | Traditional bread ovens |
| General Industry (Process) | 2,300 | 8.28 | Varies | Manufacturing & processing |
| General Industry (Captive) | 3,500 | 12.60 | Varies | Self-generation of power |
| Export-Oriented (Process) | 2,150 | 7.74 | Varies | Export manufacturers |
| Export-Oriented (Captive) | 3,500 | 12.60 | Varies | Export with self-generation |
| Power Generation | 1,225 | 4.41 | Varies | Electricity generation companies |
| Fertilizer (Feed) | 597 | 2.15 | Varies | Feedstock for urea production (Mari network) |
| Fertilizer (Fuel & Feed – SSGC/SNGPL) | 1,597 | 5.75 | Varies | For plants on utility networks |
| Fertilizer (Proposed unified) | 1,200+ | 4.32+ | Varies | Government target for full sector |
| CNG Stations | 3,750 | 13.50 | Varies | Compressed natural gas for vehicles |
| Cement Industry | 4,400 | 15.84 | Varies | Cement manufacturing |
| Government/Semi-Govt | 3,175 | 11.43 | Varies | Hospitals, schools, institutions |
Exchange Rate: 1 USD = 278 PKR (approximate, November 2025)
Table 2: TAPI Pipeline Gas Pricing Structure
| Component | Price/Cost (USD) | Details |
| Base Gas Price | 7.50 per MMBTU | Turkmenistan wellhead price (estimated) |
| Transit Fee – Afghanistan | ~0.50 per MMBTU | $400-500 million annually / 33 BCM |
| Transit Fee – Pakistan | ~0.70-0.80 per MMBTU | $700-800 million annually (if India participates) |
| Transportation & Infrastructure | 1.50-2.00 per MMBTU | Pipeline operation and maintenance |
| Total Estimated Cost to Pakistan | 10.00-11.00 per MMBTU | Total landed cost |
| Alternative: TAPI pricing (2013 agreement) | ~10.50 per MMBTU | Benchmarked at 55% of crude oil price + transit |
TAPI Pipeline Specifications:
- Total Capacity: 33 billion cubic meters (BCM) per year
- Pakistan’s Allocation: 42% (13.8 BCM or 1,325 MMCFD)
- India’s Allocation: 42% (13.8 BCM or 1,325 MMCFD)
- Afghanistan’s Allocation: 16% (5.3 BCM or 500 MMCFD)
- Pipeline Length: 1,814 km (214 km in Turkmenistan, 774 km in Afghanistan, 826 km in Pakistan)
- Estimated Project Cost: $10 billion (revised from initial estimates)
Table 3: Comparison of TAPI Gas Price vs. Current Pakistan Domestic Prices
| Consumer Category | Current Price (USD/MMBTU) | TAPI Price (USD/MMBTU) | Difference | Price Ratio |
| Domestic – Protected | 0.72 – 1.26 | 10.00 – 11.00 | +8.74 to +10.28 | 7.9x to 15.3x higher |
| Domestic – Non-Protected | 1.80 – 15.12 | 10.00 – 11.00 | -5.12 to +9.20 | 0.7x to 6.1x |
| Fertilizer (Feed – Mari) | 2.15 | 10.00 – 11.00 | +7.85 to +8.85 | 4.7x to 5.1x higher |
| Fertilizer (SSGC/SNGPL) | 5.75 | 10.00 – 11.00 | +4.25 to +5.25 | 1.7x to 1.9x higher |
| Power Generation | 4.41 | 10.00 – 11.00 | +5.59 to +6.59 | 2.3x to 2.5x higher |
| General Industry | 8.28 | 10.00 – 11.00 | +1.72 to +2.72 | 1.2x to 1.3x higher |
| Captive Power | 12.60 | 10.00 – 11.00 | -2.60 to -1.60 | 0.8x to 0.9x (TAPI cheaper) |
| Commercial | 14.04 | 10.00 – 11.00 | -4.04 to -3.04 | 0.7x to 0.8x (TAPI cheaper) |
| Cement | 15.84 | 10.00 – 11.00 | -5.84 to -4.84 | 0.6x to 0.7x (TAPI cheaper) |
Recent Price Changes:
- July 2025: Fertilizer prices increased by 250-300% (from PKR 300-350 to PKR 1,200+/MMBTU)
- February 2025: Captive power increased to PKR 3,500/MMBTU
- July 2024: General industry (captive) raised from PKR 2,750 to PKR 3,000/MMBTU
Policy Objectives:
- IMF conditionality requires phasing out gas subsidies
- Government aims to reduce circular debt in gas sector
- Target is full cost recovery from all consumer categories
- Progressive phase-out of captive power generation
TAPI Status (November 2025):
- Turkmenistan section: Completed (214 km)
- Afghanistan section: Under construction (started September 2024)
- Pakistan section: Not yet started
- India: Uncertain participation
- Kazakhstan: Expressed interest in joining
As we can see, TAPI is the most viable option for Pakistan.
Now is the turn to look at another important question: Will TAPI be profitable without India? What are the likely scenarios if TAPI becomes TAP?
For various reasons, India may decide to proceed at slower pace compared to the other TAPI partners. Because of its own policy considerations, India may opt for some kind of temporary separation from TAPI. We don’t claim to know or understand the policy stance of India but there is the need to look at all kinds of possibilities. /// nCa, 1 December 2025 (to be continued . . .)