Pakistan State Oil signs LNG agreement with Azerbaijan's SOCAR

Pakistan State Oil (PSO) has entered into a sale purchase agreement with Azerbaijan's state-run oil company, SOCAR, to secure Liquefied Natural Gas (LNG) cargo on an as-needed basis.

“PSO’s Board of Management recently approved the execution of the sale purchase agreement between PSO and SOCAR and the signed agreement has been received from SOCAR on December 24,” PSO noted in a bourse filing on Thursday.

This agreement, signed under a government-to-government arrangement, aims to address the fluctuating domestic gas demand in Pakistan.

Senator Musaddik Malik recently informed the National Assembly that the government might pursue one LNG cargo in January, as domestic gas demand typically surges from 400 million cubic feet per day (mmcfd) to 1,500 mmcfd during that period.

Malik emphasized that Pakistan is in talks with suppliers to ensure the provision of one LNG cargo in January to meet the increased demand.

Previously, Pakistan LNG Limited had signed a similar agreement with SOCAR for one cargo on an as-needed basis. However, under that arrangement, only two cargoes were received, according to sources.

Currently, Pakistan is experiencing an LNG surplus, except for the month of January.

Malik stated that Pakistan has been procuring LNG through long-term contracts and has approached Qatar to defer five LNG shipments, which Qatar has agreed to.

Despite this, there remains a surplus, and the government is in discussions with another supplier to defer five more shipments next year.

In November, Pakistan's RLNG-based power generation stood at 907 gigawatt-hours (GWh), a 14% increase from the same month last year but a 55% decrease from the 2,003 GWh produced in October.

Additionally, the cost of RLNG generation in November declined by 2% compared to the same month last year and increased by 2% from the previous month.

During the first five months of the current fiscal year, RLNG based generation declined by 5%.

Pakistan typically imports between 120 and 140 LNG cargoes annually, 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, which has ranged from 2% to 18% in different months.