ISLAMABAD: Pakistan and Azerbaijan will sign an inter-governmental agreement (IGA) to facilitate import of oil and gas products from the former Soviet nation after arrival of President Ilham Eliyev on Tuesday, said Petroleum Minister Shahid Khaqan Abbasi.

Speaking to Dawn on Monday, Mr Abbasi said the IGA would empower oil and gas companies of the two countries to start talks on trade and investment cooperation including oil, liquefied natural gas (LNG), liquefied petroleum gas (LPG), setting up of terminals and storages.

“Azerbaijan is one of the leading oil and gas exporters and has developed its expertise in these sectors,” he said.

Asked about the possible routes for import of oil and gas products from a nation bounded by the Caspian Sea and Caucasus Mountains, the minister said trade was possible through ships. “We are not discussing pipeline routes,” he added.

There is no direct link possible between Pakistan and Azerbaijan except through Iran and Afghanistan or through swap arrangement via the Middle East but that would not achieve Islamabad’s energy diversification objective, said an industry expert requesting not to be named.

When questioned on this, the petroleum minister said it would be a general governmental level agreement to allow companies to start talks and the business and trade would materialise only if found economically and logistically feasible. He said Azerbaijan was also interested in investments in terminals and storage facilities.

The two sides have already cleared the draft IGA for signing through respective ministries of foreign affairs during the visit of Prime Minister Nawaz Sharif to Baku in October last year. The draft agreement was cleared by the federal cabinet in December 2016.

At the sixth session of Pakistan-Azerbaijan Joint Economic Commission meeting presided over by petroleum minister Shahid Khaqan Abbasi and Yavar Jamalov, Minister for Defence Industry of Azerbaijan in April last year, the two sides agreed to promote investment opportunities in the energy sector including exploration and production of oil and its products and to broaden cooperation for the supply of crude oil and its products and setting up an LNG and LPG terminal through joint ventures.

Earlier, Prime Minister Nawaz Sharif had allowed in March 2015 to start negotiations with Azerbaijan on a memorandum of understanding (MoU) for mutual cooperation in the area of oil and gas exploration and production. The Prime Minister had allowed the Ministry of Petroleum to negotiate with energy companies of different countries including those of Azerbaijan.

During these interactions, Azerbaijan expressed its desire to export crude oil, petroleum products and liquefied natural gas (LNG) to Pakistan besides showing an interest in constructing a LNG terminal and liquefied petroleum gas (LPG) storage through a joint venture Azerbaijan’s state oil company — SOCAR — and Pakistan State Oil Company (PSO).

Published in Dawn, February 28th, 2017