Pakistan initiated legal proceedings against a foreign company at the International Court of Arbitration in London for its alleged failure to fulfill a contractual obligation to supply liquefied natural gas (LNG).
The case, expected to be heard next month, stems from the foreign company's failure to deliver LNG as per a 5-year agreement, resulting in substantial financial losses for Pakistan.
Sources familiar with the matter revealed that the contractual arrangement, which spanned until 2022, mandated the foreign company to provide LNG, with the contract pegged at 11.62% of the Brent price.
However, instead of fulfilling its commitment to Pakistan, the company purportedly diverted the cargo to wealthier nations, reaping significant profits.
The dispute arises from a broader issue, as Pakistan had entered into agreements with two foreign companies for the supply of ten LNG cargoes.
Shockingly, both companies failed to uphold their end of the bargain, leaving Pakistan with substantial financial setbacks. Efforts are reportedly underway to engage with the other foreign company regarding the delivery of canceled cargoes, but so far, the company has been unresponsive to Pakistan's demands.
Sources further disclosed that Pakistan has a 15-year LNG contract in place until 2032 with another foreign company, set at 12.14% of the Brent price. As of now, no legal action has been taken against this second foreign company, but concerns loom over the potential ramifications of a similar breach of contract.
