GtG mode: Pakistan restarts talks with Azerbaijan for import of petrol on credit

ISLAMABAD: In a new development, Pakistan has restarted talks with Azerbaijan on the latter’s offer made in late 2016 for providing Mogas on credit besides the current negotiations for distressed LNG at an affordable rate, a senior official of the Energy Ministry told The News.

“Both countries earlier inked an Inter-governmental Agreement (IGA) in 2017 under which Azerbaijan’s state-owned SOCAR was supposed to provide oil and gas products, including furnace oil, petrol, diesel and liquefied natural gas (LNG). SOCAR to this effect had offered two separate credit lines of $120 million for LNG and $100 million for petroleum products for 60 days.”

More importantly, the official said, the ECC on April 23, 2019 approved the IGA allowing the Petroleum Division to start negotiations on a commercial agreement with SOCAR. The agreement was signed under the UK law, but the AG office had objected to that and proposed that the agreement should be signed under the Singapore law. So, this issue did not allow the deal to take shape.

In addition, the official said, the Petroleum Division had not availed the offer for import of liquefied natural gas (LNG) on credit because its price at that time was ‘substantially more’ as compared to the-then price of spot cargoes and term cargoes from Qatar.

Now cash-strapped Pakistan because of the dollar liquidity crunch has initiated talks with Azerbaijan for the import of Mogas on credit and to this effect, Pakistan’s state-owned Pakistan State Oil and Azerbaijan’s SOCAR have started parleys.

“We have kick-started talks for import of Mogas from SOCAR which is a trading company but it all depends on the credit line conditions that SOCAR would offer,” a senior official of PSO confirmed to The News. “We want the best credit terms for the country and if the deal is done under GtG arrangement, then it will ensure a sustainable supply of Mogas in the country. We will seek 1-2 cargoes of Mogas a month from SOCAR,” the official said.

As far as the LNG offer from SOCAR is concerned, the official said that the firm has no LNG with it as it is over-committed with European countries. However, Pakistan LNG Limited (PLL) is in talks for an agreement with SOCAR for providing Pakistan a distressed LNG cargo at affordable prices if compared with the current market prices. To this effect, legal framework is being negotiated.

The official said that SOCAR will offer Pakistan distressed LNG cargo when it will be available from the market. SOCAR will not be bound to offer at least one distressed cargo to Pakistan a month. When asked what margin SOCAR would mop up from PLL while selling cargo, the official said that it was being negotiated.

It is pertinent to mention that Pakistan is also in talks with the UAE for GtG agreement for import of Mogas, and Jet Fuel. The government wants to import from the UAE under GtG mode 1.5 million tonnes of Motor Spirit per annum, which means 30 cargoes in one year under the expected 5-8 year deal.