Import of petrol from Azerbaijan under credit facility on the cards

ISLAMABAD: The agreement of paramount importune is close to taking final shape under which Azerbaijan will start providing petrol to Pakistan under 100-150 million dollar credit facility without any sovereign guarantee.

This will be flexible and open ended agreement under which Pakistan may get the petrol from Azerbaijan subject to its requirements. However, Pakistan will not be binding to lift the petrol from Azerbaijan at any cost. And more importantly there is no clause of take or pay is involved in the agreement.

The draft for agreement is being finalised by both sides and to this effect the Pakistan State Oil on behalf of Pakistan while SOCAR on behalf of Azerbaijan are now set to sign the agreement in the days to come, a senior official at Petroleum Division told The News.

The credit facility will be for 4-6 months which will provide to Pakistan ease out pressure on the balance of payments. The Economic Coordination Committee (ECC) had already given go ahead with its some inputs.

Pakistan is already getting crude oil on defer payment from July 1, 2019, from Saudi Arabia. Pakistan gets from Saudi Arabia monthly crude oil of worth $275 million and the supply from Saudi Arabia will continue for three years with a total value of $9.9 billion. In every year Saudi Arabia provides crude oil of $3.2 billion. Pak-Arab Refinery Company (PARCO) and Pakistan National Refinery (PNR) are procuring the crude oil from Saudi Arabia under defer payment facility. However, Pakistan is under long term agreement for import of petroleum products from Kuwait Petroleum Company (KPC).

Azerbaijan’s daily production of crude oil was approximately 860,000 barrels per day (bpd) and its annual gas production was approximately 29.4 billion cubic feet.

PSO and SOCAR had finalised a term sale and purchase agreement (TSPA) for supply of petroleum products under the inter-governmental agreement (IGA) signed in 2017.

Pakistan and Azerbaijan had signed IGA in February 2017 for the supply of a number of oil and gas products, including furnace oil, petrol, diesel and liquefied natural gas (LNG).

Pakistan signed government-to-government deals with Azerbaijan in various areas, including supply of electricity, crude and refined oil products, liquefied petroleum gas (LPG) and liquefied natural gas (LNG) on June 20, 2016.

Azerbaijan is interested in investing in LNG sector through State Oil Company of Azerbaijan Republic (SOCAR).