PSO board okays deal with Azerbaijan

Aftab Ahmed

Islamabad: The oil import of Pakistan relies on Middle East Countries which needs diversification. PSO board of directors has approved the petrol import from Azerbaijan on deferred payment worth $300 million annually.

Sources told Newztodays.com that Pakistan and Azerbaijan had already signed a Memorandum of Understanding (MoU) for crude oil import, refined petroleum products and LNG deal on deferred payment.

However, the PSO board took years to give go-ahead to the management to sign a commercial deal with Azerbaijan state firm Socar for petrol import.

Azerbaijan will start exporting petrol worth $170 million to Pakistan annually. It will extend it to an annual cover of $300 million later. It will diversify the import of oil in Pakistan.

The Economic Coordination Committee (ECC) had allowed Pakistan State Oil (PSO) to import oil on deferred payment from Azerbaijan. 

It was a government to government deal to import oil from Pakistan without going into a bidding process. Officials say that petrol import would ease some pressure on the dwindling foreign currency reserves of Pakistan.

The Azerbaijan government had designated state-run Socar. Pakistan had nominated PSO for signing a commercial deal. Energy ministries of Pakistan and Azerbaijan had signed an inter-governmental agreement in February 2017.

 Azerbaijan wants to export crude oil as well along with LNG to Pakistan on credit for three months.

Pakistan has been relying on Middle East countries for oil imports over decades. Now, Pakistan is going to diversify its imports and shift towards the Central Asian States.

At present, Pakistan and Azerbaijan are enjoying good diplomatic relations following a war between Azerbaijan with Armenia. Pakistan had extended diplomatic support to Azerbaijan in this war.

Therefore, now two countries are turning into a strategic relationship.

Azerbaijan’s side had made a lot of efforts to materialize a deal. However, PSO had been reluctant since 2017 to move ahead on the deal as its board of directors was not ready to approve a deal. Petrol also accounts for a major portion of the oil import of Pakistan.

Following recent development between two countries during wartime in Azerbaijan, Pakistan and Azerbaijan had bolstered their relations that have pushed deal.

Recently, the board of directors of PSO had approved a deal to import petrol from Azerbaijan on deferred payment. Officials said that Azerbaijan had also offered Pakistan to provide oil on deferred payment without opening a Letter of Credit (LC) in banks. It also made an offer to export oil at a rate less than prevailing in the international market. Therefore, it will impact the average prices of oil import in Pakistan.