KARACHI: Minister of State for Petroleum Dr. Mossadegh Malik announced on Saturday that the government is ready to finalize an agreement with Azerbaijan in the next few days for the purchase of cheap liquefied natural gas (LNG).
During a media interaction in Karachi, the minister provided insight into the agreement, highlighting its benefits for Pakistan.
He said the deal allows the government to buy LNG if needed, but also gives them a “right of refusal” if not needed.
Additionally, Malik noted, the purchase of LNG will depend on its affordability compared to other energy sources.
Availability of sufficient foreign exchange reserves will also influence the buying decision, the minister said.
The minister said that the purchase of gas would be considered if it proved to be cheaper, based on the thirty-day average of the two international LNG benchmarks.
They also provided an opportunity for private industry to procure cheap LNG, making it accessible to both large and small industries. However, he firmly stated that the resale of this cheap LNG would not be allowed.
Responding to the demand of petroleum dealers to increase the margin on petroleum products, Dr. Malik clarified that the margin will be linked to the salaries of the employees and their working hours at the petrol pumps.
A final report on dealers’ margins will be released on Monday, he said, adding that if dealers want to get an increase in their margins, they have to comply with all the conditions.
The Minister of State added that the Petroleum Division has started the process of data collection for petrol pumps across the country, and the exercise is expected to be completed by Monday.
Energy crisis-hit Pakistan earlier this month received its first LNG shipment offer in more than a year – a breakthrough that comes after the International Monetary Fund (IMF) unblocked the loan.
Last month, Pakistan failed to get LNG from the spot market in its first attempt in nearly a year, as no supplier seemed to accept the cash-strapped country’s offer.
Pakistan has two long-term supply agreements with Qatar, one signed in 2016 for 3.75 million metric tons per year of LNG, and another for 3 million metric tons per year in 2021.
It also has an annual portfolio contract with ENI for 0.75 million metric tons per annum.
In 2022, Pakistan’s LNG imports fell to 6.93 million metric tons from 8.23 million metric tons in 2021, according to data from data analytics group Kpler.
