LNG Surplus Turns to Crisis as Regional Conflict Disrupts Global Energy Markets

Pakistan’s reliance on imported gas has spiraled into a critical shortage following a series of geopolitical events and a dramatic shift in global energy supply.

The nation of Pakistan began 2024 with an unprecedented excess of liquefied natural gas (LNG), a situation stemming from a sustained decrease in domestic demand. Over the past several years, consumption had fallen from a peak of 8.2 million tonnes in 2021 to an estimated 6.1 million tonnes by the close of 2025, driven by the proliferation of affordable solar power and reduced industrial output. In a move to manage this surplus, the Pakistani government discreetly redirected substantial shipments to other nations while simultaneously shutting down inactive gas wells to mitigate the risk of pipeline damage. The financial losses incurred from distributing gas at reduced rates to residential consumers contributed significantly to the country’s mounting energy debt. A sudden and devastating escalation in regional tensions dramatically altered the energy landscape. On February 28th, a coordinated operation, dubbed “Epic Fury,” involving the United States and Israel, launched a series of attacks targeting Iranian military installations and leadership. The death of Supreme Leader Ali Khamenei immediately triggered a forceful response. Iran retaliated with a barrage of missiles and drones directed across the Middle East, leading to a near-complete shutdown of traffic through the Strait of Hormuz, a vital artery for global oil and gas transportation. This disruption swiftly translated into immediate consequences for energy markets. On March 2nd, Iranian drones targeted Qatar’s critical Ras Laffan Industrial City, the world’s largest LNG export facility, causing a complete halt to production and invoking a “force majeure” declaration. Further complicating matters, on March 18th, Israel conducted an airstrike on Iran’s South Pars gas field, the world’s largest, a discovery that simultaneously threatened Qatar’s North Field. QatarEnergy subsequently announced a 17% reduction in LNG output, anticipating repair efforts lasting up to five years. Brent crude prices surged to over $109 a barrel, while European gas prices experienced a dramatic 6% increase. Pakistan, which predominantly relies on LNG imports from Qatar and the United Arab Emirates and lacks substantial emergency reserves, faced an almost immediate transition from surplus to acute shortage. The country’s energy infrastructure is entirely dependent on these imports, which currently account for approximately 2,700 million cubic feet of daily demand, supplemented by roughly 600 million cubic feet from other sources.