Pakistan secures deals for cheaper LNG imports from Azerbaijan, boosting energy supplies

Pakistan has received approval from the federal cabinet to procure liquefied natural gas (LNG) cargoes from Azerbaijan at discounted rates, as announced by the PM House in a statement on Thursday.

During a meeting with Azerbaijan’s President Ilham Aliyev in Baku, Prime Minister Shehbaz Sharif informed him of the cabinet’s decision, marking another significant achievement for Pakistan in meeting its energy needs, following the recent shipment of crude oil from Russia.

Under the agreement, Pakistan will start receiving one LNG cargo per month at concessional rates, starting from next month.

PM Shehbaz has been actively working on this deal with Azerbaijan for the past six months, as stated by the PM Office.

Both leaders agreed on cooperation in the oil and gas sectors to support Pakistan’s energy requirements. The Pakistan State Oil (PSO) and the State Oil Company of the Azerbaijan Republic (SOCAR) will collaborate at the government-to-government level to determine the energy resources.

Moreover, Azerbaijan has expressed its willingness to invest in Pakistan’s alternative energy sector, including solar power generation.

In a separate development this week, Pakistan issued two tenders seeking spot LNG cargoes for the first time in almost a year.

Due to its reliance on gas for power generation and challenges in foreign exchange availability for imports, Pakistan has faced difficulties in procuring spot cargoes of LNG, especially after global prices surged following Russia’s invasion of Ukraine. This situation led to widespread power outages.

However, Asian spot LNG prices have eased this year, currently trading below $10, providing some relief. Pakistan LNG, a government subsidiary responsible for LNG procurement, has issued tenders seeking a total of nine cargoes to be delivered to Port Qasim in Karachi in October, December, January, and February.

Pakistan continues to have long-term supply agreements with Qatar and ENI, which help fulfill a portion of its LNG requirements.

In 2022, Pakistan’s LNG imports decreased to 6.93 million metric tons from 8.23 million metric tons in 2021, according to data from analytics group Kpler. The recent agreement with Azerbaijan is expected to enhance Pakistan’s energy supplies and contribute to meeting the country’s growing demands.