PSO allowed oil import on credit from Azerbaijan
Central Asian state has offered $100m deferred payment facility for oil imports
Central Asian state has offered $100m deferred payment facility for oil imports. PHOTO: REUTERS
ISLAMABAD:
The Economic Coordination Committee (ECC) has allowed Pakistan State Oil (PSO) oil import on deferred payment from Azerbaijan without going into a bidding process, believing it will ease some pressure on the dwindling foreign currency reserves of Pakistan.
For decades, Pakistan has been banking on oil imports from Middle Eastern countries, but now energy-rich Central Asian state Azerbaijan is willing to export oil on deferred payment. Initially, Azerbaijan has offered $100 million worth of deferred payment facility, which is extendable without any government guarantee and letter of credit.
Saudi Arabia and the United Arab Emirates (UAE) have also offered oil supply on deferred payment a couple of months ago to help Pakistan stave off pressure on its foreign currency reserves. However, the two Gulf countries want government guarantees before implementing the credit facility.
Pakistan gets $551 million IDB loan for oil, LNG import
The government has already allowed PSO the import of 350,000 tons of furnace oil to meet the demand of power plants in the summer season this year. Azerbaijan wants to supply furnace oil on credit without any government guarantee and below market prices.
However, “PSO seems to be not ready to avail of the facility and is going to float a tender,” a senior government official said.
The ECC, in a recent meeting, allowed PSO to sign a direct commercial deal with Azerbaijan’s state-run company Socar for oil import on deferred payment. “PSO should expedite arrangements under a government-to-government deal with Azerbaijan to avail the deferred oil payment facility,” the official said.
The Azerbaijan government has nominated state-run Socar and Pakistan has designated PSO for signing a commercial deal. Energy ministries of the two countries had signed an inter-governmental agreement in February 2017.
Azerbaijan has offered to export crude oil, refined petroleum products and liquefied natural gas (LNG) on credit for three months.
Socar’s activities include oil and gas exploration, production, processing and transportation of oil, natural gas and gas condensate as well as marketing of petroleum and petrochemical products in domestic and international markets.
It also operates a wide network of petrol filling stations in Ukraine, Romania, Georgia, Switzerland and Azerbaijan under its brand name.
Azerbaijan’s daily production of crude oil is estimated at 860,000 barrels per day (bpd) and its annual gas production is approximately 29.4 billion cubic feet. This makes Socar a dominant player in its core region as well as an invaluable trade partner in the global market.
Azerbaijan has also expressed interest in constructing an LNG terminal as well as LNG and liquefied petroleum gas (LPG) storages in a joint venture between Socar and a Pakistan-designated company.
Former 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 in April 2016, both sides agreed to promote investment opportunities in the energy sector and broaden cooperation in the supply of crude oil and petroleum products.
Published in The Express Tribune, April 23rd, 2019.
The Economic Coordination Committee (ECC) has allowed Pakistan State Oil (PSO) oil import on deferred payment from Azerbaijan without going into a bidding process, believing it will ease some pressure on the dwindling foreign currency reserves of Pakistan.
For decades, Pakistan has been banking on oil imports from Middle Eastern countries, but now energy-rich Central Asian state Azerbaijan is willing to export oil on deferred payment. Initially, Azerbaijan has offered $100 million worth of deferred payment facility, which is extendable without any government guarantee and letter of credit.
Saudi Arabia and the United Arab Emirates (UAE) have also offered oil supply on deferred payment a couple of months ago to help Pakistan stave off pressure on its foreign currency reserves. However, the two Gulf countries want government guarantees before implementing the credit facility.
Pakistan gets $551 million IDB loan for oil, LNG import
The government has already allowed PSO the import of 350,000 tons of furnace oil to meet the demand of power plants in the summer season this year. Azerbaijan wants to supply furnace oil on credit without any government guarantee and below market prices.
However, “PSO seems to be not ready to avail of the facility and is going to float a tender,” a senior government official said.
The ECC, in a recent meeting, allowed PSO to sign a direct commercial deal with Azerbaijan’s state-run company Socar for oil import on deferred payment. “PSO should expedite arrangements under a government-to-government deal with Azerbaijan to avail the deferred oil payment facility,” the official said.
The Azerbaijan government has nominated state-run Socar and Pakistan has designated PSO for signing a commercial deal. Energy ministries of the two countries had signed an inter-governmental agreement in February 2017.
Azerbaijan has offered to export crude oil, refined petroleum products and liquefied natural gas (LNG) on credit for three months.
Socar’s activities include oil and gas exploration, production, processing and transportation of oil, natural gas and gas condensate as well as marketing of petroleum and petrochemical products in domestic and international markets.
It also operates a wide network of petrol filling stations in Ukraine, Romania, Georgia, Switzerland and Azerbaijan under its brand name.
Azerbaijan’s daily production of crude oil is estimated at 860,000 barrels per day (bpd) and its annual gas production is approximately 29.4 billion cubic feet. This makes Socar a dominant player in its core region as well as an invaluable trade partner in the global market.
Azerbaijan has also expressed interest in constructing an LNG terminal as well as LNG and liquefied petroleum gas (LPG) storages in a joint venture between Socar and a Pakistan-designated company.
Former 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 in April 2016, both sides agreed to promote investment opportunities in the energy sector and broaden cooperation in the supply of crude oil and petroleum products.
Published in The Express Tribune, April 23rd, 2019.