Pakistan's producer of natural gas intends to boost output amid Middle East conflict

Pakistan's state natural gas producer OGDCL OGDC.PSX is preparing to raise output for the first time in recent years as the ongoing conflict in the Middle East choked supply, its managing director said.

High electricity tariffs and rapid rooftop solar adoption have reduced demand for natural gas in recent years, forcing Pakistan to renegotiate long-term liquefied natural gas (LNG) import contracts with Qatar and domestic producers to cut output.

On Monday, Qatar halted LNG production after Iran targeted the country following the U.S.-Israeli strikes over the weekend. Here are the new developments:

• OGDCL aims to raise natural gas output by 5% to 865 million cubic feet per day.

• The company also plans to boost crude oil production by 14% to 40,000 barrels per day, as the conflict has disrupted shipping through the crucial Strait of Hormuz.

• OGDCL's Managing Director, Ahmed Lak, emphasised potential further increases with new discoveries. "This potential can be fully monetised subject to offtake by the buyers," Lak said.

• Pakistan is exploring the option of reducing LNG terminal regasification due to undelivered Qatari cargoes, industry sources said.

• The move could relieve pressure on Pakistan's foreign exchange reserves, sources added.

-Reporting by Ariba Shahid in Karachi, Editing by Harikrishnan Nair/Reuters