Pakistan, Azerbaijan sign LNG deal

LAHORE: Pakistan and Azerbaijan on Monday signed a long-term agreement to import Liquefied Natural Gas (LNG) at the world’s cheapest spot price.

The agreement was signed by Pakistan LNG Limited (PLL) Managing Director Masood Nabi and SOCAR Trading Chief Executive Officer Mariam Almaszade, which was witnessed by Prime Minister Shehbaz Sharif.

The premier extending his thanks to Azerbaijan President Ilham Aliyev said on the occasion, “we are standing here as brothers from two fraternal countries.”

Petroleum Minister Musadik Malik, Punjab Governor Baleegh Ur Rehman, diplomats and other officials were also present at the signing ceremony.

Speaking on the occasion, the Prime Minister said the life of this agreement is one year which is extendable to one more year.

He said under the agreement, Azerbaijan will offer one Cargo of LNG each month and it will be up to Pakistan to either accept the cargo or not. He said there will be no financial penalty if Pakistan does not accept the cargo.

The Prime Minister termed the agreement as a major milestone in the fraternal relations between Pakistan and Azerbaijan. He especially thanked the President of Azerbaijan for playing a pivotal role in this agreement.

Alluding to his recent productive and fruitful discussions with the President of Azerbaijan, the Prime Minister said we have given approval to Azeri airline to land in Islamabad, Lahore and Karachi. This is a big step forward to promote tourism and investment and exchange of delegations between the two countries.

Shehbaz Sharif an Azeri delegation of horticulture experts is also arriving in Pakistan today on his invitation. He said we want to learn from their expertise to make the landscape of Karachi, Peshawar, Quetta and Lahore as beautiful as that of Baku.

On the occasion, the Prime Minister also touched upon the matter of recent increase in the power tariff saying it was done so under the agreement reached with the IMF.

He however clarified that this increase will not burden about sixty three percent of the total domestic consumers. He said thirty one percent of the consumers have also been given partial subsidy.

In his remarks on the occasion, the Ambassador of Azerbaijan said that both the countries are deepening their cooperation in diverse fields including energy, defence, IT and transport. He said the two sides are also negotiating a preferential trade agreement, expressing the confidence that they will be successful in this regard as well.

According to Azernews, the cabinet approved an algorithm that guarantees the LNG cargo will be offered at the most competitive price. This is to ensure transparency and prevent corruption.

Additionally, the offered price will be lower than the previous 30-day average on the LNG indices and must be the lowest price available on the day the cargo is offered.

In this landmark business deal, Pakistan has the right to reject all 12 cargoes offered over a one-year period without any explanation. However, Azerbaijan is bound to offer the next cargo the following month and in the years to come.

This agreement presents an unprecedented opportunity for Pakistan to access affordable LNG from around the world through Azerbaijan’s extensive trading network.

Petroleum Minister Mudasik Malik emphasized that the benefits of this deal will extend to all industries and households in Pakistan. The aim is to make cheaper fuels accessible to industries while also alleviating the burden on households.

Malik however opposed renewing the agreement for subsidized gas to fertilizer manufacturers. Instead he proposed a direct subsidy to farmers to reduce their input costs.