ISLAMABAD, June 14 (Reuters) - Pakistan on Wednesday approved a liquefied natural gas (LNG) purchase agreement framework with Azerbaijan, its finance ministry said.
Pakistan has not procured any spot cargos of LNG for about a year after global prices spiked following Russia's invasion of Ukraine.
The country, which has a population of 220 million, had to impose lengthy power outages because of shortages of gas, which Pakistan uses to fuel many of its power plants.
An acute balance of payments crisis meant Pakistan was unable to compete in the high-priced LNG market. The central bank's foreign reserves dropped so low as to cover barely a month of controlled imports.
Islamabad, however, earlier this week issued tenders to seek two spot LNG cargos.
Asian spot LNG prices this year have eased from record highs of $70/mmBtu hit in August, and are now trading below $10.
The approval for the LNG deal came at a meeting of the Economic Coordination Committee of Pakistan's finance ministry, which gave the go-ahead for "the framework agreement between Pakistan LNG Limited and State Oil Company of Azerbaijan Republic (SOCAR)."
The decision comes ahead of Pakistani Prime Minister Shehbaz Sharif's visit to the central Asian state later on Wednesday.
"I will hold important talks with Azerbaijani leadership to open up avenues of cooperation in energy, banking, financial services and IT sectors," Sharif said in a statement.
"We are committed to stepping up the cooperation with CARs to make Pakistan energy-secure," he said, referring to the Central Asian Republics.
Further details of the LNG deal, such as price, contract type, have not been made public.
Pakistan's Petroleum Minister Musadik Malik said on Tuesday that Azerbaijan will be supplying one LNG cargo every month at a cheaper price than the market. Azerbaijan's SOCAR Trading will fulfil the LNG supply.
He did not disclose when this monthly supply would begin.
Reporting by Asif Shahzad, Editing by Louise Heavens, Chizu Nomiyama and Jane Merriman
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Shahzad is an accomplished media professional, with over two decades of experience. He primarily reports out of Pakistan, Afghanistan regions, with a great interest and an extensive knowledge of Asia. He also reports on politics, economy, finance, business, commodities, Islamist militancy, human rights