Pakistan and Azerbaijan signed a groundbreaking agreement to secure liquefied natural gas (LNG) at highly competitive prices. The accord is aimed at bolstering economic growth and stability.
The agreement was signed between Pakistan LNG Limited (PLL), a state-owned entity mandated to procure LNG, and the State Oil Company of the Azerbaijan Republic (SOCAR) in Lahore.
Prime Minister Shehbaz Sharif, who visited Baku in June 2023, called the development a “major milestone.”
Under the terms of the deal, Azerbaijan will supply one LNG cargo per month at the most competitive spot price in the global markets. This mutually beneficial arrangement will span one year, with an option to extend for an additional year.
Today marks a major development in the bilateral relations of Pakistan & Azerbaijan. Our respective ministries signed an LNG Agreement today to procure one LNG cargo per month for a period of one year. This Agreement will help ease gas shortage in the country & provide relief to… pic.twitter.com/znwJv6a2SE
— Shehbaz Sharif (@CMShehbaz) July 24, 2023
LNG Agreement
“The life of this agreement is one year which is extendable to one more year,” PM Sharif said, addressing attendees at the signing ceremony.
“SOCAR will offer an LNG cargo to Pakistan every month and Pakistan would decide whether we have to buy this cargo at this price.”
What distinguishes this agreement from others in the industry is Pakistan’s unique option to reject any offered cargo without facing any monetary penalties. Prime Minister Shehbaz Sharif emphasized that this landmark deal ushers in a new era of cooperation and friendship between Pakistan and Azerbaijan.
The successful outcome of the negotiations can be attributed to the warm and forward-looking leadership of Azerbaijan’s President Ilham Aliyev. Prime Minister Shehbaz Sharif expressed gratitude for the extensive discussions held during his visit to Azerbaijan, which paved the way for the agreement.
Ambassador of Azerbaijan Khazar Farhadov termed the energy agreement a step towards bolstering ties and exploring new avenues of cooperation.
Another great achievement between the 2 brotherly countries❗️Happy to share that the Framework Agreement for the sale and purchase of the LNG cargoes was signed btw #Azerbaijan (SOCAR Trading) and #Pakistan (PLL). 1/2 pic.twitter.com/pOgfQGjCdz
— Khazar Farhadov 🇦🇿 (@k_farhadov) July 24, 2023
Earlier this month, Azerbaijan’s Minister of Digital Development and Transport Rashad Nabiyev visited Pakistan to discuss and enhance cooperation in the IT and telecom sectors.
Energy needs
Currently, Pakistan fulfills its LNG needs through long-term supply contracts, primarily with Qatar. The country boasts two significant agreements with Qatar, the first of which was inked in 2016 for an annual supply of 3.75 million metric tons of LNG. The second agreement, signed in 2021, ensures a yearly supply of 3 million metric tons.
Recently, PLL sought additional LNG supply by issuing a tender. In response, Singapore-based Trafigura offered to provide super-chilled fuel to meet Pakistan’s energy demands last week, potentially adding another valuable source to the nation’s LNG supply network.