PSO, Azerbaijan’s SOCAR sign MoUs to transform Pakistan’s oil infrastructure

KARACHI: In a significant development for Pakistan’s oil industry, Pakistan State Oil (PSO) has joined forces with SOCAR, Azerbaijan’s largest state-owned oil company, to sign several Memorandums of Understanding (MoUs) aimed at bolstering energy security and infrastructure.

On Monday, four MoUs were formalised in Azerbaijan by PSO. Among the key agreements, PSO and SOCAR plan to create a Joint Trading Company in Singapore. This initiative aims to enhance Pakistan’s energy supply chain and seize opportunities in the global market.

Furthermore, PSO, SOCAR, and the Frontier Works Organisation (FWO) have agreed on an MOU to enhance Pakistan’s oil pipeline network, addressing the country’s current challenges of limited pipeline-based fuel transportation. In a related agreement, PSO, FWO, and various partners have invited SOCAR to consider becoming an equity partner in efforts to connect the northern regions of Pakistan with the existing pipeline infrastructure. At present, pipelines account for less than one-third of the total oil movement within the country, highlighting a critical opportunity for network expansion.

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Another tripartite MOU was established between PSO, PRL, and SOCAR, detailing foundational principles for cooperation in the areas of Project Management Consultancy support and technical services related to refinery modernisation. This agreement aims to leverage shared experiences and knowledge in conducting feasibility studies and scope definitions, as well as offering technical advisory, risk assessment and mitigation, and procurement and contracting support.

In addition, PSO and SOCAR signed a Government-to-Government (G-to-G) Strategic Partnership Agreement (SPA) to further strengthen their bilateral energy collaboration.

These landmark agreements were established during the visit of Prime Minister Mian Shahbaz Sharif to Azerbaijan, with PSO formally notifying the Pakistan Stock Exchange (PSX) on Monday about these significant developments and its plans to expand the oil pipeline infrastructure.

Industry insiders have noted that these agreements represent a crucial leap in Pakistan’s strategy for energy security, promoting regional partnerships and expediting investments in the oil and gas sector. The PSO Board of Directors has already given the green light to the pipeline project in collaboration with SOCAR, marking Pakistan’s first long-distance oil pipeline developed through a combination of foreign investment and local partnership.