To combat the acute energy shortage and externally influenced fuel costs, Pakistan has restarted negotiations with Azerbaijan to purchase fuel on credit.
In order to import Mogas, Pakistan has started discussions with the State Oil Company of the Azerbaijan Republic (SOCAR).
The government wants to secure advantageous credit conditions for the nation, and a government-to-government (G2G) agreement will guarantee the nation’s long-term access to Mogas. The government is hoping for 1-2 Mogas shipments from SOCAR each month.
Since it has already overcommitted to European consumers, SOCAR has a minimal to no advanced stockpile of LNG. Due to the limited amount, Islamabad is attempting to purchase 20,000 tonnes of gas from Baku, and the administration is hoping that a deal can be reached soon.
Before this, the nations had signed an Intergovernmental Agreement (IGA) in 2017 that called for the delivery of liquefied natural gas, gasoline, and furnace oil by Azerbaijan’s state-owned SOCAR (LNG). Previously, SOCAR had provided 2 different 60-day credit lines totaling $120 million for LNG and $100 million for petroleum products.
Although Singaporean law was encouraged, the transaction was purportedly inked under UK law. The deal was thus put off at the moment.
The Ministry of Petroleum stated in an official statement last year that “significantly higher” pricing prevented it from taking advantage of SOCAR’s offer of multi-million dollar lines of credit for oil and gas deliveries to Pakistan.
Relevantly, SOCAR provided a $120 million LNG credit line between February and August of 2021, during which time LNG vessels were issued via spot bids for $7.2 million per cargo or $51 million for seven cargoes. Comparing the SOCAR offer to the LNG arrangement with Qatar, it was also more costly by $15 million for each cargo or $105 million for seven shipments.
