SNGPL defers third-party pipeline capacity allocation

ISLAMABAD: Amid a high-stakes tussle, Sui Northern Gas Pipelines Limited (SNGPL) has deferred the allocation of pipeline capacity to a third party for transportation of natural gas, only weeks after approving it.

Informed sources said the decision was taken at a recent board of directors (BoD) meeting of the state-run company through a majority vote. According to a memorandum of the Lahore-based utility, the BoD had on Sept 11 “discussed its earlier decision taken at the 639th meeting held on August 15 regarding allocation of 35mmcfd (million cubic feet per day) pipeline capacity to UGDCL (Universal Gas Distribution Company Ltd). After due deliberation, the BoD with majority resolved that the implementation of the said decision… be and is hereby deferred.”

Earlier, the company had conveyed that, on the recommendations of management and advice of the energy ministry, the BoD had approved the “allocation of additional 35mmcfd (25mmcfd on firm basis till 2033 in line with the terms of existing access agreement and 10mmcfd on interruptible basis for six months) pipeline capacity to UGDCL and execution of 2nd addendum to the access agreement to account for additional capacity”.

The move comes as SNGPL quietly enforces rationing of natural gas even before the onset of winter.

Decision reversed weeks after initial go-ahead on advice from management, energy ministry

The company avoids public discussion, but officials privately admit that loadshedding is a way to contain unaccounted-for gas (UFG) losses. “Uninterrupted gas supply to domestic and commercial consumers is a national loss,” an official told Brackly News.

Meanwhile, the Petroleum Division is processing a case to impose a captive gas levy on private-sector gas distribution — effectively targeting UGDCL, the only player in the field — to “ensure a level playing field” with state-owned suppliers.

This is despite the fact that Pakistan faces a severe natural gas and LNG oversupply, forcing the government to postpone more than 170 LNG import cargoes and compelling SNGPL to order local producers to shut down or curtail production.

The glut has caused substantial losses to local producers such as state-owned OGDCL, listed at the London Stock Exchange, while also draining foreign exchange and burdening consumers.

Households are forced to pay heavy fixed charges (capacity payments) several times higher than the price of gas, which they receive for only seven to eight hours a day.

Currently, more than 300mmcfd of cheaper local gas remains shut-in or curtailed under SNGPL’s instructions to absorb expensive LNG imports under binding contracts.

At the same time, the company has begun supplying gas to residential and commercial consumers for just two to three hours at breakfast, lunch, and dinner, without public notice, after the government raised fixed monthly charges by 50pc from July 1, 2025. For consumption of about Rs450, gas utilities now bill over Rs1,550 in fixed charges, taking the total to nearly Rs2,500 including taxes.

This has created cash flow problems for local producers such as OGDCL, GHPL and others, hampering exploration and production at home and abroad and worsening future energy constraints.

OGDCL, the country’s largest producer, has publicly deplored the situation. “The less gas intake by SNGPL from Qadirpur, Nashpa, Chanda, Dhok Hussain, Mela, Bettani, Pirkoh, Togh and Loti fields and TAL owing to SNGPL system constraints and by UPL from Uch fields due to less demand from power purchaser adversely impacted daily net production by 1,148 barrels of crude oil, 76mmcfd of gas and 55 tonnes of LPG,” it reported to its board a few months ago.

Published in Brackly News, September 23rd, 2025