Azerbaijan state energy company announces oil and gas investment in Pakistan

Azerbaijan’s state energy company SOCAR is set to finalize an investment in Pakistan’s oil and gas sector by February, Pakistan’s finance ministry said on Thursday, signaling growing foreign investor interest as Islamabad pushes ahead with energy-sector reforms.

The announcement was made by SOCAR President Rovshan Najaf during a business roundtable chaired by Pakistan’s Finance Minister Muhammad Aurangzeb on the sidelines of the World Economic Forum’s annual meeting in Davos.

Najaf said SOCAR views Pakistan as a long-term energy partner, citing the country’s large market, rising energy demand, and reform momentum in the oil and gas sector. He said the company was looking to expand its footprint beyond existing commercial arrangements.

SOCAR already operates in Pakistan through SOCAR Trading under a government-to-government liquefied natural gas (LNG) framework with Pakistan LNG Limited.

The arrangement allows SOCAR to supply up to one LNG cargo per month without take-or-pay obligations, providing pricing and demand flexibility.

Najaf also pointed to ongoing engagement with Pakistan State Oil on petroleum product supplies and expressed interest in expanding cooperation across the broader oil and gas value chain as reforms continue.

Aurangzeb welcomed SOCAR’s planned investment, reiterating the government’s commitment to attracting strategic and commercially viable investment in the oil and gas and mining sectors, which he described as critical to Pakistan’s energy security and industrial growth.

He said ongoing reforms are aimed at improving pricing transparency, strengthening contractual clarity and enhancing risk-sharing mechanisms to support sustained private-sector participation.

The development has come at a time when Pakistan is looking to defer LNG cargoes from Qatar and Italy amid dwindling demand in Pakistan.

Pakistan had signed long-term deals for these cargoes almost a decade ago at a time when chronic gas shortages had plagued the country’s electricity generation and crippled industries. However, the official estimation of demand for gas was left unfulfilled as local consumers moved to solar power due to high electricity tariffs.

It led to a situation where Pakistan became an energy-abundant country from an energy-deficient one.

The government has planned to cancel as many as 57 cargoes of LNG during 2026 and 2027, resulting in savings of nearly $600 million.

An official from Pakistan's Ministry of Energy told Nukta in December the government had finalized talks with Italian energy company ENI to cancel 21 cargoes — 10 in 2026 and 11 in 2027.

Under its contract with ENI, Pakistan imports one cargo per month at 12.14% slope of Brent price.

The official said negotiations are underway to cancel at least 36 cargoes from Qatar, from which Pakistan imports nine per month under two separate agreements.