Azerbaijan seeks to resume LNG supply

ISLAMABAD:

Azerbaijan has emphasised that Pakistan should resume imports of liquefied natural gas (LNG) from the Central Asian nation to meet its growing domestic consumption needs.

Earlier, during the tenure of the Pakistan Democratic Movement (PDM) government, the two sides signed an agreement for import of at least one LNG cargo per month.

It was not based on the controversial “take-or-pay” clause rather it was a commercial deal that could better suit Pakistan. However, Islamabad imported only a few LNG cargoes from Azerbaijan and could not continue to take supplies on a regular basis.

Federal Minister of Commerce Jam Kamal Khan and Ambassador of Azerbaijan to Pakistan Khazar Farhadov met on Thursday to discuss how to bolster economic cooperation between the two nations.

The ambassador took up the matter of LNG sales with the minister where he emphasised the resumption of LNG supplies to Pakistan and the potential for mutual investments, particularly in energy and information technology sectors.

Separately, Pakistan has been importing LNG from Qatar for many years under a long-term contract. The contract is based on the take-or-pay condition, as part of which Pakistan is bound to import gas from Doha without any interruption.

Azerbaijan also wants Pakistan to consistently import LNG from it, particularly one cargo per month. It was also part of the LNG deal that Azerbaijan would offer a price less than the prevailing rate in the international gas market.

Also, Pakistan and Azerbaijan are at an advanced stage of finalising a preferential trade agreement (PTA) to boost bilateral trade. They have pledged to finalise the deal as early as possible to take benefit of new opportunities to give a significant push to bilateral trade.

This deal will also open avenues for Pakistan’s entry into the Russian market that offers scores of opportunities to many countries owing to tensions with the European Union member states after the beginning of Ukraine war.

According to media reports, India has now replaced Germany as a major importer of pharmaceutical products from Russia.

In the same manner, Pakistan can not only capitalise on the emerging opportunities in the Azerbaijan market, but it can also make its mark by penetrating the Russian market.

Highlighting the historical, political and economic ties between Pakistan and Azerbaijan, the commerce minister underscored the need for extending bilateral trade to its true potential by addressing the major challenges.

He noted the increase in exports to Azerbaijan from $9.70 million in 2021-22 to $12.08 million in 2022-23, alongside a significant rise in imports primarily due to fertiliser purchase.

The ambassador stressed the importance of making high-level visits to enhance bilateral relations as well as elevate trilateral cooperation with Turkiye.

At present, Pakistan and Azerbaijan are actively negotiating the PTA and its draft is being finalised. Notably, as a goodwill gesture, Azerbaijan has exempted Pakistani rice from customs duty until December 2027.

The minister reiterated Pakistan’s commitment to strengthening commercial and economic ties while underlining the importance of people-to-people contacts and the inking of the PTA to bolster trade volumes and create new business opportunities.

Published in The Express Tribune, April 5^th, 2024.

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