BAKU, Azerbaijan, December 19. SOCAR Trading of Azerbaijan delivered the first batch of liquefied natural gas (LNG) to Pakistan under an agreement signed in July this year with Pakistan LNG Ltd (PLL) for LNG supplies over a one-year period (with the possibility of extension for another year) on flexible terms, with SOCAR (State Oil Company of Azerbaijan) not participating in PLL tenders, Trend reports via a source familiar with the matter.
According to the terms of the agreement, the first shipment will consist of 65,000 tons of LNG (a typical cargo), and agreements for this batch, as well as future ones, will be pre-negotiated between the parties.
"During the signing of the framework agreement in Lahore on July 24, 2023, SOCAR Trading and PLL agreed that the Azerbaijani side would provide Pakistani partners with monthly information on the availability of goods and LNG prices (in US dollars)," explained the source. "At the same time, each batch of LNG will be offered 45 days before the start of the respective delivery periods, and each cargo offer will have a fixed validity period during which PLL may accept the offer or refrain from purchasing for any justified reasons. Such a scheme satisfied the Pakistani government."
According to the source, SOCAR Trading offers LNG to Pakistan at the most favorable prices, purchasing it from trusted partners (Azerbaijan does not produce LNG but trades in liquefied gas from third countries).
Until 2023, SOCAR Trading had participated in Pakistan's international tenders for LNG supplies, but thanks to the strategic partnership between the two countries, it was decided this summer to conclude a long-term agreement on LNG supplies on mutually beneficial terms.
"Pakistan wants to reduce its fuel dependence on coal and import oil and gas. In 2020, SOCAR Trading supplied approximately 550,000 cubic meters of LNG from third countries to Pakistan; in 2021, 150,000 cubic meters; and there were no deliveries in 2022, but negotiations on long-term cooperation were ongoing, which were successful in 2023," added the source.
Global demand for LNG increased in 2022–23 due to international sanctions against Russia (the country was the largest supplier of gas and LNG), and this situation may continue into 2024.
"If Pakistan regularly takes the batches of LNG offered by SOCAR Trading, it will become one of the largest clients of the Azerbaijani state oil company's trading house. Working with the multi-million-dollar market of Pakistan is very important and commercially attractive for SOCAR Trading. Azerbaijan and Pakistan are strategic partners and have great prospects for expanding cooperation," the source noted.
Established in December 2007 and headquartered in Geneva, SOCAR Trading operates as the marketing arm of SOCAR. Initially mandated to market Azerbaijani oil from the Azeri-Chirag-Guneshli block and other Azerbaijani fields, the company has since expanded its presence with five principal sales offices in global trade hubs such as Geneva, London, Singapore, Dubai, and Houston, complemented by several representative offices.
As the central hub for SOCAR Trading operations, Geneva oversees the company's diverse activities. Singapore serves as the second-largest office, facilitating the sale of Azerbaijani oil to the east and engaging in various product trades, fostering ongoing partnerships with Asian collaborators. The Dubai office focuses on business development in the Gulf and East African regions.