Pakistan, Azerbaijan sign LNG pact

Pakistan has signed an agreement with Azerbaijan for the supply of LNG at “competitive spot prices”, local media reported on July 24.

The deal, signed between Pakistan LNG (PLL), a state-owned entity, and SOCAR Trading Company, the international marketing and development arm of Azerbaijan's State Oil Company, promises to offer much-needed relief to Pakistan's energy sector and its population.

According to the terms of the agreement, Azerbaijan will provide Pakistan with one LNG cargo each month, and the contract will be in effect for a duration of one year, with the possibility of extending it for another year, Express Tribune reported.

A noteworthy aspect of the agreement is that Pakistan has been granted the option to reject any offered cargo without incurring any monetary penalty.

The need for this LNG agreement arises from the energy challenges Pakistan has been facing in recent times. Sourcing LNG at competitive prices will help alleviate the strain on the country's energy infrastructure and improve energy security, which has been impacted by gas shortages. These shortages have led to frequent blackouts and disruptions to industrial activities.

Pakistan's Economic Coordination Committee of the cabinet approved PLL's proposed framework agreement with SOCAR last month. This approval paved the way for the finalisation of the agreement.

Pakistan has two operational floating LNG import terminals at Port Qasim near Karachi.