How war on Iran turned Pakistan's LNG surplus into a looming shortage

Islamabad, Pakistan – Pakistan's energy landscape underwent a dramatic transformation in early 2026, as the country shifted from managing an LNG surplus to confronting acute shortages within weeks. This remarkable reversal stemmed from escalating Middle Eastern conflicts that disrupted global gas supply chains and fundamentally altered Pakistan's energy security position.

At the beginning of 2026, Pakistan faced the unusual challenge of excess liquefied natural gas capacity. Domestic demand had experienced a sustained decline over three consecutive years, dropping from 8.2 million tonnes in 2021 to 6.1 million tonnes by late 2025. This reduction resulted from market penetration of affordable solar panel technology and decreased industrial consumption as manufacturing sectors curtailed operations.

The oversupply situation prompted government officials to implement emergency measures, including the sale of surplus shipments to international markets and the temporary closure of domestic gas wells to prevent infrastructure damage from excessive pipeline pressure. Excess gas that couldn't be redirected was distributed through residential networks at significant financial losses, exacerbating the energy sector's mounting debt burden.

The geopolitical landscape shifted dramatically on February 28, when United States and Israeli forces initiated Operation Epic Fury – a comprehensive military campaign targeting Iranian infrastructure. The strikes focused on missile installations, air defense systems, military facilities, and key leadership positions, resulting in the death of Supreme Leader Ali Khamenei during the initial assault phase.

Iran's response involved launching extensive missile and drone strikes across the region, effectively paralyzing maritime traffic through the Strait of Hormuz. This critical waterway serves as a conduit for approximately one-fifth of global oil and gas transportation, making its disruption a significant concern for international energy markets.

The conflict's impact on energy infrastructure became apparent immediately. On March 2, Iranian retaliatory drones successfully targeted Qatar's Ras Laffan Industrial City, recognized as the world's largest LNG export facility. This strategic strike prompted Qatar, the globe's second-largest LNG exporter after the United States, to cease all production operations and invoke force majeure provisions – a legal mechanism releasing the company from contractual obligations due to extraordinary circumstances beyond their control.

Military escalation continued on March 18, when Israeli forces struck Iran's South Pars gas field, situated off the country's southern coastline and representing the world's largest natural gas reservoir. The strategic significance of this target extended beyond Iran, as South Pars and Qatar's North Field share the same underground gas formation, creating potential risks for both nations' production capabilities. Iran responded with another attack on Ras Laffan facilities.

QatarEnergy subsequently announced a 17 percent reduction in LNG production capacity, with restoration efforts projected to require up to five years for completion. The global energy markets reacted swiftly to these developments, with Brent crude prices climbing above $109 per barrel and European gas prices surging 6 percent in a single trading session.

For Pakistan, which sources virtually all imported gas from Qatar and the United Arab Emirates while maintaining no strategic reserves, the transition from surplus to shortage occurred with remarkable speed.

A system built on imports

Pakistan's natural gas supply structure relies on three primary sources to meet daily consumption requirements. Domestic gas fields provide the largest contribution at approximately 2,700 million cubic feet per day, though these reserves have experienced gradual depletion over recent years.

Imported LNG, primarily secured through long-term contracts with Qatar, contributes roughly 600 million cubic feet per day under normal supply conditions. This imported gas plays a crucial role in Pakistan's energy mix, particularly for electricity generation.

The third component consists of bottled LPG, predominantly utilized by rural households not connected to the national pipeline infrastructure. Pakistan imports more than 60 percent of its LPG requirements from Iran, representing another supply channel disrupted by the current conflict.

Pakistan's LNG import program commenced in 2015 when domestic production capacity could no longer satisfy growing demand. Currently, imported LNG fuels approximately 25 percent of the country's electricity generation, establishing the power sector as the primary consumer of these imports.

The geographic concentration of Pakistan's LNG sources presents significant vulnerability, with Qatar and the UAE collectively accounting for 99 percent of total imports.