The federal cabinet of Pakistan has granted approval for an agreement to procure liquefied natural gas (LNG) cargoes from Azerbaijan at discounted rates.
As per the statement, released in a press release from the Prime Minister’s Office, Prime Minister Shehbaz Sharif informed Azerbaijan’s President Ilham Aliyev about the cabinet’s decision during their meeting in Baku. This development is considered a significant achievement for Pakistan in meeting its energy needs, following the recent delivery of crude oil from Russia.
According to the agreement, Pakistan will start receiving one LNG cargo per month at concessional rates, beginning next month.
Prime Minister Shehbaz has been working on this deal with Azerbaijan for the past six months. Both leaders have agreed to enhance cooperation in the oil and gas sectors to help Pakistan address its energy requirements.
The Pakistan State Oil (PSO) and the State Oil Company of Azerbaijan Republic (SOCAR) will collaborate at the government-to-government level to explore energy resources.
Additionally, Azerbaijan has expressed its interest in investing in Pakistan’s alternative energy sector, specifically in solar power generation.
In recent developments, Pakistan has issued two tenders to procure spot LNG cargoes for the first time in almost a year.
Due to its dependence on gas for power generation and challenges in foreign exchange reserves for imports, the country has faced difficulties in acquiring spot cargoes in the past.
However, the Asian spot LNG prices have significantly decreased this year, providing a more favorable environment for procurement.
Pakistan LNG, a government subsidiary responsible for procuring LNG from the international market, has issued the tenders for six cargoes in October and December, with delivery to Port Qasim in Karachi.
Another tender seeks three cargoes for delivery in January and February. These tenders reflect Pakistan’s ongoing efforts to secure LNG supplies to meet its energy demands.