Pakistan State Oil (PSO) has entered into a sale purchase agreement with Azerbaijan’s state-run SOCAR to help import Liquefied Natural Gas (LNG) cargoes.
The agreement, signed under a government-to-government arrangement, aims to address the domestic gas demand of Pakistan. According to an official, Pakistan is in talks with suppliers to ensure the provision of one LNG cargo in January to meet domestic demand.
In a note to the Pakistan Stock Exchange, PSO said the Ministry of Energy (Petroleum Division) had informed it of the Economic Coordination Committee’s approval of the sale and purchase agreement. The federal cabinet had also ratified this decision, it said.
Subsequently, read the note, PSO’s Board of Management had approved the execution of the agreement with SOCAR. The signed agreement had been received from SOCAR on Dec. 24.
The deal recalls a similar arrangement inked between Pakistan LNG Limited and SOCAR for one cargo on an as-needed basis. However, that arrangement saw the receipt of only two cargoes. According to Energy Minister Musadik Malik, Pakistan currently has LNG in surplus apart from the month of January, when demand spikes due to the peak of winter. Due to the surplus, Pakistan recently approached Qatar to defer five LNG payments under their long-term contract. Qatar reportedly agreed to do so.
In November, Pakistan’s RLNG-based power generation stood at 907 gigawatt-hours (GWh), a 14% increase from the same month last year. However, this was still a 55% decrease from the 2,003 GWh produced in October. Pakistan traditionally sees a significant decline in power consumption during the winter months, with the government hoping to alleviate the problem by offering concessionary prices for individuals and businesses that utilize more than their winter average this year.
Annually, Pakistan imports 120-140 LNG cargoes, with the majority (approximately 85-100) coming under long-term contracts with Qatar. The country has not imported spot cargoes for nearly a year due to surplus electricity capacity and a decline in consumption.
Pakistan has two long term agreements with Qatar—one at 13.7% slope of Brent Crude and other at 10.2%.