Pakistan signs LNG procurement agreement with Azerbaijan, bolstering energy cooperation
Countries explore new avenues of partnership including energy, defence and technology
Islamabad: Pakistan and Azerbaijan have signed an agreement for the procurement of liquefied natural gas (LNG) on highly flexible terms.
This agreement aims to bolster energy cooperation and foster economic growth between the two countries.
The framework agreement, signed between Pakistan LNG Limited (PLL) and the State Oil Company of the Azerbaijan Republic (SOCAR), promises to pave the way for strengthened bilateral ties. Masood Nabi, the PLL managing director, and Mariam Almaszade, the CEO of SOCAR Trading, signed the agreement in Lahore on July 24.
Prime Minister Shehbaz Sharif, who recently visited Baku in June to boost relations, hailed the agreement as a “major milestone” for both countries. He said that the LNG agreement “will help ease the gas shortage in the country and provide relief to the people and industry.”
What's the deal?
Under the agreement, Azerbaijan will offer 12 low-cost LNG cargoes to Pakistan on flexible terms for a period of one year. Importantly, Pakistan retains the right to decline any offered cargo without incurring any penalties.
“The life of this agreement is one year which is extendable to one more year,” PM Sharif said at the signing ceremony, highlighting the potential for long-term cooperation. “SOCAR will offer one LNG cargo to Pakistan every month and Pakistan would decide whether we have to buy this cargo at this price.”
Ambassador of Azerbaijan to Pakistan, Khazar Farhadov, praised the energy agreement as the two friendly countries explore new avenues of partnership. Pakistan has expressed keenness to expand collaboration in petrochemicals, solar energy, technology, and defense sectors.
The accord comes as Pakistan seeks to diversify its energy sources. The South Asian country, with a population of more than 230 million, faces challenges in meeting its energy requirements due to the rising prices in the spot LNG market and financial constraints.
During PM Sharif’s visit to Baku in June 2023, the two nations approved the LNG purchase agreement to enhance cooperation in energy resources. President of Azerbaijan Ilham Aliyev played a crucial role in finalizing the deal, and PM Sharif expressed his gratitude for the President’s support.
IT cooperation
The bilateral cooperation is not limited to energy. Islamabad and Baku have also agreed to enhance collaboration in technology and trade, with discussions held on finalizing the two separate preferential and transit trade agreements. Last week, Azerbaijan’s Minister of Digital Development and Transport Rashad Nabiyev visited Pakistan with a focus on enhancing cooperation in the IT and telecom sectors.
Direct flights to resume soon
Tourism cooperation is also on the agenda. Azerbaijan Airlines (AZAL) plans to initiate direct flights between Islamabad and Baku soon to further promote bilateral trade and tourism prospects. Pakistani officials have proposed extending these flights to Karachi and Lahore as well.