Away from Gulf, Pakistan set to import oil, gas from Central Asia

Published: February 4, 2017
The agreement will allow the two countries to enter into multibillion-dollar arrangements for trading in oil and gas without going through the bidding process. PHOTO: REUTERS

The agreement will allow the two countries to enter into multibillion-dollar arrangements for trading in oil and gas without going through the bidding process. PHOTO: REUTERS

ISLAMABAD: Pakistan is poised to start oil and gas imports from Central Asian states as the Foreign Office has given the go-ahead to the signing of an agreement with energy-rich Azerbaijan, in a move that will lessen Pakistan’s excessive reliance on Middle Eastern countries.

At present, Pakistan is importing oil from Gulf Arab countries including the United Arab Emirates (UAE), Kuwait and Saudi Arabia. To meet gas needs, it is purchasing the commodity from another Gulf country, Qatar.

Pakistan’s oil production reaches two-year high

Talking to The Express Tribune, a senior official of the Ministry of Petroleum and Natural Resources revealed that Azerbaijan had offered to export crude oil, petroleum products and liquefied natural gas (LNG) to Pakistan.

It has also expressed interest in constructing a terminal as well as LNG and liquefied petroleum gas (LPG) storages in a joint venture between Azerbaijan’s state oil company Socar and a Pakistan-designated company.

The official recalled that Prime Minister Nawaz Sharif had approved a proposal on March 10, 2015 for the start of negotiations with Azerbaijan on a memorandum of understanding (MoU) for mutual cooperation in the area of oil and gas exploration and production.

In the sixth session of Pakistan-Azerbaijan Joint Economic Commission held in April 2016, both sides agreed to promote investment opportunities in the energy sector including exploration and production of oil and its products, broaden cooperation for the supply of crude oil and its products and set up an LNG and LPG terminal in a joint venture between nominated enterprises of the two countries.

The prime minister had allowed the Ministry of Petroleum to negotiate with energy companies of different countries including those of Azerbaijan.

During negotiations, Pakistan and Azerbaijan agreed to an inter-governmental draft agreement, which was also cleared by the Ministry of Foreign Affairs and the Law and Justice Division from political and legal points of view respectively.

‘Pakistan has received Rs1.6tr as investment in oil and gas sector’

The cabinet, in its meeting held on December 15, 2016, also reviewed the possibility of signing the inter-governmental agreement for cooperation in the area of energy and gave the green light to the petroleum ministry.

The agreement will allow the two countries to enter into multibillion-dollar arrangements for trading in oil and gas without going through the bidding process. This is being adopted along the same lines as an LNG deal with Qatar and a petroleum product accord with Kuwait.

Pakistan has long been an importer of crude and refined oil products from Middle Eastern countries and is now exploring opportunities of LNG import from other countries. In a recent tender, Italian firm Eni quoted the lowest price for LNG supply to Pakistan.

Pakistan and Azerbaijan have also agreed on conducting joint research by setting up a laboratory and undertaking oil and gas production tests.

Furthermore, they will share scientific and technological developments in oil and gas exploration and production, while also committing to the training of professionals working in the petroleum industry.

Under the draft agreement, both sides will also move to jointly evaluate the possibility of supporting relevant sides in oil and gas exploration and development projects in the two countries.

Published in The Express Tribune, February 4th, 2017.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.

Facebook Conversations

Reader Comments (8)

  • ghazal
    Feb 4, 2017 - 9:38AM

    AND CPEC will be used to get oil and gas from middle east to china??Recommend

  • abreez
    Feb 4, 2017 - 9:40AM

    Pakistan’s priority should be Pakistan-Iran oil and gas pipeline and then Pakistan can purchase oil and gas anywhere from the world. Iran will happily accept oil and gas swap deals and Pakistan will benefit from such deals ultimately.Recommend

  • Ruby
    Feb 4, 2017 - 11:31AM

    Ohh! So this is the reason for the new found Pakistani love for Azerbaijan. Otherwise why would Pakistan NA suddenly wake up and condemn Armenian ‘aggression’?Recommend

  • cautious
    Feb 4, 2017 - 2:21PM

    How do you get oil or gas from Azerbaijan to Pakistan? How do you purchase oil/gas cheaper from Azerbaijan than the Arabs?Recommend

  • 007
    Feb 4, 2017 - 5:13PM

    @ghazal, Did you read ? It says Pakistan already imports Oil from Saudi Arabia, UAE, and Kuwait and recently they agreed a deal with Qatar to get Gas. A deal with Azerbaijan and other Central Asian republics would diversify Pakistan’s business. CPEC is not restricted to Pakistani only. It benefits China as well and they have clearly said they have interests in Middle East. Recommend

  • Raj - USA
    Feb 4, 2017 - 9:43PM

    The reason for contracts with Azerbaijan is that Dubai and other GCC countries are clamping down heavily on money laundering, kickbacks or parking ill-gotten wealth in their countries. It has become a lot more difficult to carry on these activities in those countries. Recommend

  • dubious
    Feb 5, 2017 - 6:45AM

    Another “no bid” deal – except this is for oil from a land locked country which has no ability to deliver the oil to Pakistan. Anyone surprised?Recommend

  • Osman
    Feb 5, 2017 - 4:15PM

    I love Pakistan and its people. Pakistan and Azerbaijan are friendly nations. But I don’t understand one thing: why you consider that Azerbaijan is a Central Asian state. Geographically, Azerbaijan is located in East Europe and West Asia. Ehnically, Azerbaijanis are European. To reach Central Asia, we need to cross the Caspian Sea or enter the region through European Russia. It’s better to say Azerbaijan is an Eurasian nation, as it has nothing to do with Tajikstan or Afghanistan.


More in Business