Pakistan approved a liquefied natural gas (LNG) purchase agreement framework with Azerbaijan on Wednesday, the finance ministry said.
The approval for the LNG deal came at a meeting of the economic coordination committee (ECC) of Pakistan's federal cabinet, which gave the assent for "the framework agreement between Pakistan LNG Limited and State Oil Company of Azerbaijan Republic (SOCAR)."
The procedural approval came ahead of Pakistani prime minister Shehbaz Sharif's ongoing visit to the central Asian state. "I will hold important talks with Azerbaijani leadership to open up avenues of cooperation in energy, banking, financial services and IT sectors," PM Sharif said in a statement.
"We are committed to stepping up the cooperation with CARs to make Pakistan energy-secure," he said, referring to the Central Asian Republics. Technical and financial details of the LNG deal, including price and contract type, have yet to be made public.
Pakistan's petroleum minister Musadik Malik said that Azerbaijan would be supplying one LNG cargo every month "at a cheaper price than the market".
Pakistan's energy crisis
Pakistan has not procured any spot cargos of LNG for nearly a year since global energy prices spiked as a result of Russia's 2022 invasion of Ukraine.
With a population of over 220 million, Pakistan has had to impose power outages because of fuel shortages at many of its power plants.
An acute balance of payments crisis has rendered Pakistan incapable of competing in the high-priced global LNG market. The State Bank of Pakistan's foreign reserves have dropped low enough to barely cover a month of imports. But earlier this week, Pakistan issued tenders to seek two spot LNG cargos.
Asian spot LNG prices are now trading below $10/mmBtu, after easing from record highs of $70/mmBtu witnessed in August 2022.
The approval for the LNG deal came at a meeting of the economic coordination committee (ECC) of Pakistan's federal cabinet, which gave the assent for "the framework agreement between Pakistan LNG Limited and State Oil Company of Azerbaijan Republic (SOCAR)."
The procedural approval came ahead of Pakistani prime minister Shehbaz Sharif's ongoing visit to the central Asian state. "I will hold important talks with Azerbaijani leadership to open up avenues of cooperation in energy, banking, financial services and IT sectors," PM Sharif said in a statement.
"We are committed to stepping up the cooperation with CARs to make Pakistan energy-secure," he said, referring to the Central Asian Republics. Technical and financial details of the LNG deal, including price and contract type, have yet to be made public.
Pakistan's petroleum minister Musadik Malik said that Azerbaijan would be supplying one LNG cargo every month "at a cheaper price than the market".
Pakistan's energy crisis
Pakistan has not procured any spot cargos of LNG for nearly a year since global energy prices spiked as a result of Russia's 2022 invasion of Ukraine.
With a population of over 220 million, Pakistan has had to impose power outages because of fuel shortages at many of its power plants.
An acute balance of payments crisis has rendered Pakistan incapable of competing in the high-priced global LNG market. The State Bank of Pakistan's foreign reserves have dropped low enough to barely cover a month of imports. But earlier this week, Pakistan issued tenders to seek two spot LNG cargos.
Asian spot LNG prices are now trading below $10/mmBtu, after easing from record highs of $70/mmBtu witnessed in August 2022.