Pakistan’s energy sector is experiencing upheaval as a sudden geopolitical event has shifted the country’s LNG market from oversupply to acute shortage in a matter of weeks. At the beginning of 2026, Pakistan was dealing with excess LNG, with demand decreasing steadily over the past three years to around 6.1 million tonnes by late 2025, primarily due to increased solar energy adoption and reduced industrial activity.
Authorities took measures to address the surplus, including diverting excess LNG cargoes to international buyers and shutting down domestic gas wells to manage pressure in pipelines. Any remaining excess gas was channeled into household networks at a financial loss, exacerbating the country’s existing circular debt in the energy sector.
The situation took a drastic turn following a major conflict in West Asia. On February 28, the United States and Israel initiated a significant military operation against Iran, leading to disruptions in global energy flows. Iran responded with missile and drone attacks, impacting traffic through the critical Strait of Hormuz, a vital route for one-fifth of the world’s oil and gas shipments.
The conflict’s repercussions were swift, with Iranian strikes on key facilities at Ras Laffan Industrial City on March 2 prompting Qatar to halt production at the world’s largest LNG export complex. QatarEnergy declared force majeure, suspending supply commitments due to the extraordinary circumstances arising from the conflict.
Israel’s targeting of Iran’s South Pars gas field on March 18, which shares a reservoir with Qatar’s North Field, raised concerns about prolonged production disruptions in both countries. Subsequent retaliatory actions further damaged infrastructure at Ras Laffan, leading Qatar to reduce LNG output by 17%, with repairs anticipated to span several years.
