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Asia Pakistan

Pakistan’s PM visits Azerbaijan, seeking energy cooperation

Islamabad approves LNG purchase deal with Baku as Pakistan looks to meet energy demands



Shehbaz Sharif departs on two-day visit to Baku, Azerbaijan, on June 14, 2023.
Image Credit: PID

Islamabad: Pakistan’s Prime Minister Shehbaz Sharif is on a visit to Azerbaijan with the aim of strengthening energy cooperation between the two countries.

As Pakistan seeks spot liquefied natural gas (LNG) cargoes, the two-day visit (June 14-15) holds significant importance for the country to secure favorable energy deals. During the visit, Shehbaz Sharif will engage in extensive discussions with Azerbaijan President Ilham Aliyev on crucial areas of cooperation, including trade, investment, and energy.

“The visit is part of our government’s policy to strengthen bilateral cooperation and build win-win partnerships,” the prime minister said in a tweet on Wednesday. He will also hold discussions with Azerbaijan’s officials to explore opportunities for cooperation in the energy, banking, financial services, and IT sectors apart from expediting the finalisation of the Preferential Trade Agreement (PTA). “Central Asia is central to our energy security policy and we are committed to stepping up the cooperation with the Central Asian Republics (CARs) to make Pakistan energy-secure,” PM Sharif said.

Islamabad okays LNG framework with Baku

Hours before the prime minister’s visit, Pakistan’s top economic decision-making body approved an LNG purchase agreement framework with Azerbaijan. The Economic Coordination Committee (ECC) of Pakistan’s finance ministry authorised the framework agreement between Pakistan LNG Limited (PLL) and the State Oil Company of Azerbaijan Republic (SOCAR).

In a press conference on Tuesday, Pakistan’s Petroleum Minister Musadik Malik announced that Azerbaijan had agreed to supply an LNG cargo to Pakistan every month at a lower price. Although the minister did not disclose specific details of the supply deal, he confirmed that a contract had been signed with Azerbaijan and it would commence in the near future.

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The development comes after long discussions between Islamabad and Baku. Azeri state energy company SOCAR had extended two credit lines totaling over $220 million to Pakistan for oil and gas supplies. Under a government-to-government (G2G) agreement, SOCAR had previously offered to provide petroleum products and LNG cargoes to Pakistan State Oil (PSO) and PLL on credit throughout the year.

On June 13, Pakistan also issued two tenders seeking LNG cargoes for the first time in nearly a year. This week, Pakistan received its first shipment of 45,000 metric tons of discounted crude oil from Russia, marking another step toward addressing its energy requirement.

The South Asian country has recently faced challenges in procuring spot LNG cargoes given the country’s dependence on gas for power generation due to the depletion of its indigenous gas reserves and the shortage of foreign exchange. Pakistan first started importing liquefied natural gas in 2015 to meet its energy needs.

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