Pakistan has reopened talks with Azerbaijan to import petrol on credit as it struggles to battle the distressing energy crunch and externally influenced fuel prices.
Pakistan has begun talks with the State Oil Company of the Azerbaijan Republic (SOCAR) for importing Mogas.
The government is aiming for favorable credit terms for the country, and if the deal is done under a government-to-government (G2G) arrangement, it will ensure the country’s long-term supply of Mogas. Authorities are looking for 1-2 Mogas cargoes per month from SOCAR.
In terms of LNG, SOCAR has little to no advanced inventory because it has already over-committed to European buyers. Despite the shortage, Islamabad is negotiating with Baku to import 20,000 tons of gas, with the government hopeful for a deal in the coming months.
Both countries previously signed an Inter-governmental Agreement (IGA) in 2017 under which Azerbaijan’s state-owned SOCAR was to supply oil and gas products such as furnace oil, gasoline, diesel, and liquefied natural gas (LNG). SOCAR had previously offered two separate credit lines of $120 million for LNG and $100 million for petroleum products for a period of 60 days.
The agreement was reportedly signed under UK law, but it was urged that it be signed under Singapore law. As a result, the deal was delayed at the time.
In an official statement last year, the Ministry of Petroleum clarified at the time that it did not avail of the offer of SOCAR for multi-million dollar credit lines for oil and gas supplies to Pakistan because of ‘substantially higher’ prices.
Pertinently, SOCAR offered a $120 million LNG credit line from February to August 2021, during which LNG vessels were available for $7.2 million per cargo or $51 million for seven cargoes through spot tenders. Similarly, SOCAR’s offer was also higher by $15 million per cargo or $105 million for seven consignments when compared to the LNG agreement with Qatar.
