Pakistan decides to buy LNG from Azerbaijan

ISLAMABAD: The federal government has decided to buy cheap liquified natural gas (LNG) from Azerbaijan in a bid to reduce financial burden of costly purchases from the international market, ARY News reported on Saturday.

Pakistan LNG Limited (PLL) – a subsidiary of the Petroleum Division – and State Oil Company of Azerbaijan Republic (SOCAR) will enter into an agreement, enabling the purchase of LNG at a price lower than higher rates in the international market.

As per the agreement, Pakistan will buy one LNG cargo per month from the Azerbaijani company.

Meanwhile, a summary was forwarded to the Economic Coordination Committee (ECC) following the approval of Prime Minister Shehbaz Sharif, ensuring the necessary procedural steps are taken to finalise the arrangement.

The LNG cargo will be sold to Pakistan at a rate below the spot rate. PLL will facilitate payment by opening a letter of credit (LC) in a local bank, with SOCAR covering the confirmation charges of the international bank.

The documents revealed that PLL faced challenges in securing LNG cargoes through spot and midterm contracts from June 2022 due to high prices in the global market and Pakistan’s credit rating downgrade.

Earlier in February, it was reported that Pakistan and Azerbaijan were in talks in Baku for the import of PoL products and Liquified Natural Gas (LNG) on credit.

A Pakistani delegation led by State Minister for Petroleum, Musadik Malik along with the delegation was in Azerbaijan to discuss the imported oil and LNG.  Pakistan is interested to buy LNG cargo a month, the sources said.