Pakistan and Azerbaijan have signed a series of agreements and memorandums of understanding (MOUs) focused on trade and energy during a significant two-day visit by Pakistani Prime Minister Shehbaz Sharif to Baku, Azerbaijan. Sharif, accompanied by a high-level delegation, met with Azerbaijani President Ilham Aliyev, where both leaders discussed enhancing bilateral relations, particularly in commerce, energy, and infrastructure.
In a social media post, Prime Minister Sharif expressed satisfaction with the “excellent meeting” with President Aliyev, emphasizing that the two countries are moving forward with plans to finalize a $2 billion investment portfolio. This commitment marks a substantial step in the long-standing fraternal ties between the two nations. “This will be the first quantum jump in our trade and investment relations and will be a huge reflection of our fraternal ties,” Sharif stated, underscoring the significance of this development.
Strengthening Trade and Investment Relations
The visit, Sharif’s second to Azerbaijan since taking office in 2024, was primarily centered around expanding cooperation in key sectors such as trade, energy, security, and commerce. During their talks, Sharif and Aliyev pledged to maximize the “immense” potential for collaboration, particularly in regional communication and multilateral forums. Additionally, the two countries are preparing to sign formal agreements worth $2 billion in April, aiming to further solidify economic ties.
Separately, addressing the Pakistan-Azerbaijan Business Forum 2025 in Baku along with President Aliyev, PM Shehbaz underscored the need to enhance the bilateral trade between Pakistan and Azerbaijan as their current trade of $40 million hardly reflected the strong relationship between the two brotherly countries.
They also agreed to enhance their bilateral trade to meet $2 billion trade and investment target between the two countries and appreciated Azerbaijan President for generously removing the import duty on Basmati rice from Pakistan.
MoUs signed between Pakistan and Azerbaijan
Here is a list of the key agreements signed between Pakistan and Azerbaijan:
- Machike-Thallian-Tarujabba White Oil Pipeline Project
- An MoU was signed between the State Oil Company of Azerbaijan Republic (SOCAR), Pakistan’s Frontier Works Organization (FWO), and Pakistan State Oil (PSO) for collaboration on this key energy infrastructure project. The pipeline will stretch from Karachi to Khyber Pakhtunkhwa.
- Sale and Purchase of LNG Cargoes
- An amendment agreement was signed to the Framework Agreement for the sale and purchase of LNG cargoes under the Master LNG Sale and Purchase Agreement.
- Cultural and Economic Cooperation between Nakhchivan and Lahore
- A Memorandum of Understanding (MoU) was signed between Azerbaijan’s Nakhchivan and Pakistan’s Lahore to enhance collaboration in culture, tourism, urban development, education, science, economy, and other relevant fields of public life.
- Additional MoUs in Trade, Energy, Tourism, and Education
- Multiple other MoUs were signed to further strengthen cooperation in the areas of trade, energy, tourism, and education. These agreements are aimed at promoting greater bilateral ties between the two countries.
Azerbaijan’s $2 Billion Investment commitment
One of the most significant outcomes of the visit was Azerbaijan’s commitment to invest $2 billion in Pakistan’s economy. This follows President Aliyev’s announcement during a state visit to Pakistan in 2023, which was reiterated during the current talks. Aliyev explained that Azerbaijan had already received concrete project proposals from Pakistan, with Azerbaijani teams evaluating the various initiatives.
“Today, with my brother, we set very ambitious but, at the same time, realistic targets to finalize all the discussions within one month,” Aliyev said. “These projects cover infrastructure development, as well as energy, mining, and possibly other sectors. These agreements, many of which have already been signed, will create a strong foundation for future cooperation.”
The $2 billion investment is expected to address critical sectors such as energy, infrastructure, and agriculture, with a substantial portion allocated to Pakistan’s energy needs. Given Pakistan’s ongoing energy challenges, cooperation with Azerbaijan—a country rich in energy resources—could prove instrumental in bolstering Pakistan’s energy security and diversification efforts.
Focus on Infrastructure and Energy
The two countries have outlined key areas for investment. In energy, the collaboration may focus on oil and gas exploration, energy infrastructure development, and the supply of liquefied natural gas (LNG). Such partnerships are expected to enhance Pakistan’s energy mix, reduce dependency on imports, and address energy shortfalls.
Another vital sector for investment is infrastructure development. As Pakistan continues to prioritize its economic growth, substantial investments in roads, bridges, and port facilities are planned, with the aim of enhancing logistical capabilities and boosting trade. This investment will not only improve domestic infrastructure but also strengthen regional connectivity, benefiting both countries.
Agriculture and Economic Growth
In addition to energy and infrastructure, the agriculture sector is a key area for growth, particularly for Pakistan. Sharif emphasized the importance of modernizing agricultural practices and introducing advanced technologies to increase productivity and food security. Investments in agro-based industries will also contribute to economic prosperity and open new avenues for export, strengthening the economic relationship between the two nations.
Future trajectory of Pakistan-Azerbaijan relations
Both leaders remain optimistic about the future trajectory of Pakistan-Azerbaijan relations. Prime Minister Sharif expressed his gratitude for the announced $2 billion investment, describing it as a mutual venture that would bring significant dividends to both countries. “I am extremely grateful to you for announcing that Azerbaijan intends to invest $2 billion in Pakistan, which will be mutually beneficial,” Sharif said during the press conference.
With plans to finalize agreements by April and tangible projects underway, the strategic partnership between Pakistan and Azerbaijan is set to usher in a new era of economic cooperation, offering long-term benefits for both nations.