ISLAMABAD: Energas, a consortium comprising the Lucky Group and QatarEnergy, has abandoned a multimillion-dollar plan to establish a liquefied natural gas (LNG) terminal at Port Qasim.
The consortium cited fundamental changes to Pakistan’s energy policy, shifting requirements and longstanding unresolved fiscal matters for the decision, which emerged on Monday.
The Port Qasim Authority (PQA), meanwhile, has warned Energas that it will terminate its final letter of intent (LOI) and forfeit its $2 million initial concession fee unless the company provides “unconditional acceptance” and an updated project status by Nov 30, 2026.
Subsequently, Energas has approached the prime minister for the refund of $2m, absolving it of any contractual lapse and instead blaming the government and factors beyond its control for not moving ahead.
Informed sources told Dawn that QatarEnergy had booked an LNG terminal and committed to supplying additional LNG at around 10.2pc of Brent crude prices, nearly the same rate agreed with Pakistan State Oil under its second long-term contract, to ensure full utilisation of the terminal’s capacity.
Qatar had sought pipeline capacity allocation for transporting LNG through the proposed terminal near Karachi, a level playing field for terminal operations, and an exemption from third-party access (TPA) requirements that reserve capacity for government entities.
Ahead of PM Shehbaz’s August 2022 visit to Qatar, Pakistan approved changes to its LNG policy, removing restrictions requiring upcoming private-sector terminals to allocate part of their capacity to the government.
The changes were conveyed to Qatar by then-Petroleum Minister Musadik Malik to revive LNG cooperation, including the terminal’s completion and another long-term gas supply contract alongside two existing agreements.
However, the project failed to advance over the following three years as Pakistan’s energy requirements changed and the country sought to divert existing contracted LNG cargoes, even before this year’s closure of the Strait of Hormuz and the suspension of Qatar’s LNG production. In a letter to PM Shehbaz, Energas Chairman Muhammad Ali Tabba said PQA was demanding unconditional acceptance of the final LOI by Nov 30, warning that failure to comply would result in its cancellation and forfeiture of the $2m fee.
Tabba said the Lucky Group consortium had undertaken the self-funded project in good faith, responding to Pakistan’s energy requirements at the time, which had since materially changed.
“Energas’s inability to proceed with the project is attributable to two critical factors: firstly, a fundamental change in national energy policy and requirements, resulting in a clear frustration of purpose; and secondly, the persistent and longstanding unresolved policy and fiscal matters with the government, PQA and other government bodies/authorities, which have continuously impeded the viability,” he noted.
The Energas chairman contended that those issues remained unresolved, preventing QatarEnergy and its Pakistani partners from reaching a final investment decision (FID).
“The government had committed to resolving these matters following discussions with the State of Qatar. However, despite the passage of time, the aforesaid matters remain unresolved, thereby adversely affecting investor interest,” Tabba said.
He added that the national energy requirements and the policy environment had materially evolved since the project was originally conceived and Energas had already approached PQA for the return/refund of the partial concession fee.
Energas said Pakistan’s official Integrated Energy Study (IES) — Final Report of March 28, 2025 confirmed that no new LNG terminals were required over the next five years.
The company argued that the finding fundamentally changed the circumstances under which the project was conceived, undermining its economic rationale and creating what it described as a “clear frustration of purpose” for investors.
Energas further noted that when its provisional LOI was issued in May 2020, the LNG Policy 2011 provided terminal operators with a five-year tax holiday beginning from their commercial operations date. However, the exemption was withdrawn for new terminals in June 2021, while existing beneficiaries retained the concession.
Energas attributed the withdrawal to International Monetary Fund (IMF) conditions, arguing that the change further undermined the project’s viability.
In its letter to Energas, PQA said the $2m deposited by Energas was not an ordinary refundable advance but an initial/partial concession fee under Clause 2.6(i) of the Project Guidelines 2019 that provides that this amount may be forfeited if the developer fails to fulfil the required conditions within the prescribed time, unless the parties agree otherwise.
Furthermore, paragraph 27 of the final LOI required LOI termination and forfeiture of $2m in the absence of unconditional acceptance within the deadline.
Responding to Energas’s concerns over pipeline capacity, gas transportation agreements, tie-in area allocation, TPA exemptions and income tax relief, PQA maintained that these were the developer’s responsibilities.
“Project Guidelines require the developer to undertake the necessary surveys, investigations, environmental studies, hydraulic studies, detailed design and other project-related studies, and to obtain the requisite governmental and regulatory approvals,” PQA said.
The authority added that developers were also responsible for financing, design, construction, access arrangements, regulatory compliance and other project requirements.
Published in Dawn, October 27th, 2026
