Until JV firm is formed: PSO to leverage SOCAR’s network in Singapore

ISLAMABAD: Pakistan State Oil (PSO) is to use traders/clients of State Oil Company of the Azerbaijan Republic (SOCAR) in Singapore, till the infrastructure of the joint venture company was put well in place, well-informed sources told Business Recorder.

On February 18, 2025, the Federal Cabinet was briefed that in order to take advantage of SOCAR’s experience in international markets, and/or enter into trade agreement with SOCAR for supply of Hydrocarbons, PSO and SOCAR teams have had series of meetings on the concept of establishing an International Trading Company in Singapore.

The initiative would not only benefit PSO by getting access to the international markets but also help in significant savings for the Government of Pakistan by reducing the forex payment balance.

ECC clears Singapore firm’s incorporation by PSO, SOCAR

The PSO Board had approved the incorporation of the company at Singapore on April 28, 2022 and also obtained Legal Advice regarding the incorporation of International Trading Company at Singapore.

On February 14, 2025, approval of the Economic Coordination Committee (ECC) was solicited for incorporation of international joint trading company at Singapore by Pakistan State Oil (PSO) and State Oil Company of the Azerbaijan Republic (SOCAR) in the best public interest.

During the ensuing discussion, the Petroleum Division informed the forum that through the initiative, PSO would leverage international trading market for better oil pricing. PSO also informed the house on technical details and further informed that once the company is operationalised, PSO would be able to obtain better pricing because of the experience and better positioning of SOCAR in the international arena.

The forum was informed that the instant summary had been submitted only for seeking approval to incorporate international trading company, and the matter of equity injection was not part of it.

The ECC however directed the Finance Division to confirm whether there is any limit on the authorization of the ECC regarding foreign exchange allocations or not.

In response to question asked by the forum about risk management and governance framework, the forum was informed by PSO that initially local talent would be hired for operational purposes, and the compliance function would be carried out with focus on determination of checks and balances.

It was further informed that the traders/clients of SOCAR would be used till the infrastructure of the joint venture company was put well in place.

The ECC directed the Petroleum Division to conduct due diligence for the sake of clarity regarding approval threshold of ECC viz-a-viz equity.

The forum also directed the Petroleum Division to do further diligence to find out the approving forums for foreign exchange cover and for other necessary approvals. In addition to that the Petroleum Division was also asked to give a specific timeline about operationalisation of Company.

Copyright Business Recorder, 2025