Pakistan Gas Firm Seeks Storage Deals After Supply Shock

Universal Gas Distribution Company (UGDC) is actively negotiating with international firms to build gas storage facilities and secure long-term liquefied natural gas (LNG) contracts. These moves are a direct response to severe supply disruptions in Pakistan, where the closure of the Strait of Hormuz has critically impacted the nation's energy security. The company’s CEO, Ghiyas Abdullah Paracha, confirmed that UGDC has reached preliminary understandings with several partners interested in these infrastructure projects.

The urgency of these negotiations stems from Pakistan’s extreme reliance on external gas sources. According to data presented at the 54th Gastech Conferences, Qatar and the UAE supply approximately 99 percent of Pakistan’s LNG. This imported fuel constitutes roughly 30 percent of the country’s total gas supply, primarily serving power generation, fertilizer production, and industrial sectors. The resulting shortage has forced the government to reconsider its energy mix.

Geopolitical conflict drives supply crisis

The Gastech report, titled 'The Outlook for Gas and LNG Markets in Asia,' attributes the current market volatility to the geopolitical conflict involving Israel, the United States, and Iran. This tension has created a bottleneck in the Strait of Hormuz, effectively redrawing global energy maps in real time. The report notes that this geopolitical sensitivity has exposed the fragility of gas and LNG markets, particularly for nations dependent on Middle Eastern exports.

Consequently, price volatility and shipping uncertainty are expected to sharply increase power costs for Pakistani utilities. The report indicates that these supply disruptions have prompted the government to examine alternative energy sources, including coal, hydropower, and nuclear power. This shift is part of a broader strategy to reduce dependence on volatile import streams and stabilize the domestic power grid.

Corporate strategy shifts toward infrastructure

UGDC’s participation in the Gastech event marked a strategic pivot toward long-term infrastructure development. Paracha stated that the company presented Pakistan’s gas-sector reforms and the opening of the domestic gas market to private-sector participation. This initiative aims to attract international investment in critical infrastructure, such as gas storage and distribution networks, to enhance grid agility.

The company is also exploring cross-border power export and import options to share shortages with neighboring regions. By expanding operating reserves and rethinking fuel stockpiles for transport and power generation, UGDC seeks to create a more resilient supply chain. These efforts align with broader Asian policy reviews focused on accelerating renewables and updating power generation mixes for better flexibility.

Future energy security measures

Beyond immediate supply fixes, the report suggests that policymakers in Asia are reviewing how to future-proof domestic energy systems. This includes deploying utility-scale solar and wind farms alongside commercial rooftop solar and energy storage solutions. For Pakistan, the integration of these renewables with new gas storage infrastructure could provide a more stable and diversified energy base.

The emphasis on gas storage is particularly significant for Pakistan, where current infrastructure lacks sufficient buffering capacity against supply shocks. By establishing these facilities, UGDC aims to mitigate the impact of future geopolitical disruptions. This approach combines immediate operational flexibility with long-term strategic stockpiling, ensuring that the power sector remains operational even during periods of severe external supply constraints.