Domestic Gas Production in Pakistan Projected to Drop by 50% by 2034
PACRA forecasts indigenous gas output to fall from 2,634 mmcf/d in FY24 to 1,266 mmcf/d by FY34, cutting domestic gas’s share of total supply to 25% and heightening reliance on imports.
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Desk Analysis
How This Affects the Exchange
Sector Effect
Negative · Do not buy
Oil & Gas sector faces reduced domestic supply and financial stress on SNGPL/SSGC, so Don't buy.
Sectors & Direction
Desk read
Desk call: Do not buy · Negatively affected
- Oil & GasNegatively affected
- PowerNegatively affected
Companies
Mentions in This Briefing
Sectors: Oil & Gas, Power — Negative · Do not buy. PSX tickers: SNGP, SSGC. Oil & Gas sector faces reduced domestic supply and financial stress on SNGPL/SSGC, so Don't buy.
Full Story
Open on ProPakistani## Declining Indigenous Gas Output
A new study by Pakistan's Credit Rating Agency (PACRA) projects that domestic gas production will halve over the next decade. Production is expected to drop from roughly 2,634 million cubic feet per day (mmcf/d) in fiscal year 2024 to about 1,266 mmcf/d by fiscal year 2034. Consequently, the contribution of domestic gas to Pakistan’s overall energy mix is likely to shrink from around 73% to just 25%, increasing dependence on imported fuels.
## Weak LNG Demand and Shifting Energy Mix
LNG imports have already fallen sharply, decreasing from about 6 million tonnes to 3.7 million tonnes in the first nine months of FY26 as industrial and power users turn to solar and other alternatives. This trend reduces demand for imported gas even as local production continues to decline.
## Pipeline Projects and Supply Diversification
Long‑term supply diversification could come from the proposed Turkmenistan‑Afghanistan‑Pakistan‑India (TAPI) and Iran‑Pakistan gas pipelines. However, persistent delays mean these projects are unlikely to address the immediate shortfall.
## Financial Stress on Gas Distributors
Sui Northern Gas Pipelines Ltd. (SNGPL) and Sui Southern Gas Company Ltd. (SSGC) face mounting liquidity pressures due to delayed tariff adjustments, weak bill recoveries, and rising working‑capital needs. Their financial health remains a key concern for the sector.
## LPG Segment Shows Modest Strength
Local LPG production rose 15.5% in FY26 while imports fell 12% year‑on‑year to about 1.5 million tonnes. An additional 136,000 tonnes of domestic capacity could further bolster supplies, though the FY27 import target of 1.6 million tonnes indicates continued reliance on imports. LPG prices will stay vulnerable to international factors such as Saudi Aramco contract rates, freight costs, geopolitical events, and rupee‑dollar fluctuations.
## Proposed Structural Reforms
The government, backed by the World Bank, is considering a major restructuring of SNGPL and SSGC. The plan would separate transmission from distribution, create a National Gas Transmission Company, and establish four provincial distribution firms. It also proposes a multiyear tariff regime, third‑party pipeline access, and gradual opening of gas trading to private players, potentially allowing private firms to handle about 20% of gas volumes in the first year. While these reforms could improve cost transparency, reduce gas losses, and help tackle the Rs 3.4 trillion circular debt, benefits are expected to materialise only over the longer term and face resistance from incumbent companies.
## Market Implications
The projected halving of domestic gas output and the ongoing financial strain on SNGPL and SSGC suggest heightened risk for the Oil & Gas sector. Investors should monitor the progress of the restructuring plan and any policy shifts affecting tariffs or private sector participation.