Pakistan’s LNG Imports Under Pressure: Impacts of the Strait of Hormuz’s Closure and Pakistan’s Diplomatic Response

Center for Strategic and International Studies  |  Caroline Russell

Pakistan has cut natural gas imports and increased coal power generation to 30 percent following the Strait of Hormuz closure and QatarEnergy's force majeure declaration. The loss of Qatari supplies, which previously accounted for 7.5 million of Pakistan’s 8.4 million tonnes per annum in active LNG contracts, has triggered widespread power blackouts.

High spot prices forced Islamabad to buy a cargo for $21.88/MMBtu in mid-July 2026. Domestic gas rationing caused Agritech to suspend operations at its 433k tonnes per year urea plant, directly threatening agricultural yields for upcoming rice and wheat seasons. The crisis hits hard. Islamabad has engaged in complex diplomacy with Tehran to secure transit guarantees for Qatari tankers while exploring credit-backed U.S. LNG shipments through the Export-Import Bank of the United States. Without a broader regional settlement to reopen the strait and restart Ras Laffan, Pakistan faces compounded economic vulnerabilities and deepening energy shortages ahead of autumn.

Comment

The structural vulnerability exposed by the Ras Laffan outage demonstrates how energy supply interruptions cascade rapidly into agricultural manufacturing failures. Shutting down domestic gas feeds to the 433k tonnes per year Agritech plant underlines how single-point infrastructure disruptions force nations to trade immediate grid power against long-term food security. This trade-off degrades agricultural productivity across the Indus basin far beyond the immediate megawatt loss in the national grid.

The mechanism driving this disruption is the inflexibility of single-commodity supply chains dependent on the Strait of Hormuz chokepoint. When Sui Northern Gas Pipelines Limited issued its force majeure following Qatari supply failures, the loss of feedstock halted synthetic ammonia production entirely. Consequently, the reliance on high-cost spot cargoes from Mozambique's Palma terminal fails to restore the cheap, continuous pressure required for base-load industrial manufacturing.

Strategic Question for Discussion

Which factor presents a more severe threat to Pakistan's long-term economic stability — the immediate industrial output loss from halted operations at facilities like the Agritech urea plant, or the structural debt incurred by procuring spot cargoes from Mozambique's Palma terminal?

The available evidence points toward the immediate agricultural deficit as the more dangerous short-term threat, given that fertilizer shortages directly compromise seasonal rice and wheat yields. While spot purchases from Palma terminal exacerbate foreign exchange reserves, the downstream systemic shock of reduced crop output risks triggering broader food inflation and social instability.

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