Pakistan-Azerbaijan LNG import talks advance amid broader trade negotiations

Azerbaijan has called on Pakistan to resume the importation of liquefied natural gas (LNG) to address its increasing domestic consumption needs.

This request was made during a meeting between Jam Kamal Khan, Pakistan’s Federal Minister of Commerce, and Khazar Farhadov, the Ambassador of Azerbaijan to Pakistan.

The discussion, which took place on Thursday, also explored avenues for mutual investments, particularly focusing on the energy and information technology sectors.

This move comes as a follow-up to a previous agreement signed under the Pakistan Democratic Movement (PDM) government, which stipulated the importation of at least one LNG cargo per month from Azerbaijan.

Unlike Islamabad’s long-term contract with Qatar, which includes a take-or-pay clause, the deal with Azerbaijan was designed as a more flexible commercial agreement.

However, Pakistan has not maintained regular imports as initially agreed, having only imported a few cargoes.

Azerbaijan’s push for the resumption of LNG supplies is part of a broader initiative to solidify economic cooperation, including the finalization of a preferential trade agreement (PTA) aimed at boosting bilateral trade.

Both countries are reportedly close to concluding the PTA, which is expected to facilitate Pakistan’s entry into new markets, including Russia.

This strategic move is particularly relevant given the shifting dynamics of global trade, with countries like India capitalizing on opportunities in the Russian market amidst tensions with the European Union.

The meeting also highlighted the potential benefits of the trade agreement for bilateral relations, with Azerbaijan offering competitive LNG pricing and exempting Pakistani rice from customs duties until December 2027.

The importance of high-level visits and trilateral cooperation with Turkey was emphasized as a means to enhance bilateral relations.

Commerce Minister Khan noted a significant increase in trade, with exports to Azerbaijan rising from $9.70 million in fiscal year 2021-22 to $12.08 million in 2022-23.

The increase in imports was primarily attributed to fertilizer purchases, underscoring the growing economic interdependence between the two nations.