ISLAMABAD: Russia on Friday agreed 'in principle' to supply crude oil and oil products to Pakistan, with technical details of the deal to be finalized by March this year, Pakistan’s Minister of State for Petroleum Dr. Musadik Malik confirmed on Friday.
Last month, days after he led a government team to Moscow, Dr. Malik said Russia would sell crude oil to Pakistan at a discounted price as well as supply discounted petrol and diesel.
Following the meetings of the eighth Pakistan-Russia Inter-Governmental Commission (IGC) in Islamabad, which ran from January 18-20, and an agreements-signing ceremony on Friday, Dr Malik told reporters that Pakistan wants to import about 30 to 35% of its total crude oil requirement from Russia.
“Parco (Pak-Arab Refinery Company) is saying that [they can use] about a third, or 30 to 35 percent of Russian origin crude [oil], the PRL (Pakistan Refinery Limited) believes that up to about 35 percent of their crude can be of Russian origin, and Byco [Petroleum] believes that their refinery can use up to 80 to 90 percent of Russian crude oil,” he said.
The minister added that the only refinery that would be unable to use Russian-origin crude oil would be Attock Petroleum as it was “designed for Pakistani crude only.”
After signing deals with Pakistan, Russia's Energy Minister Nikolay Shulginov told reporters Moscow would allow Pakistan to pay for its energy purchases “in currencies of friendly countries.”
"With our Pakistani colleagues, we held negotiations and we have discussed finances and banking cooperations, and we have agreed that payments would be made in the currencies of friendly countries," an interpreter quoted Shulginov as saying.
A joint statement later released by the Pakistan-Russia IGC added that the technical details of the deal would be finalized in March 2023.
“Both sides agreed that after consensus on the technical specifications achieved, the oil and gas trade transaction will be structured in a way it has mutual economic benefit for both countries. The process to be completed within March 2023," the statement said.
Islamabad and Moscow also agreed to strengthen energy cooperation and trade and broaden energy infrastructure investment “based on strategic and favorable commercial terms” and, to this end, said they would work on a “Comprehensive Gas Infrastructure Plan for Energy Cooperation,” to be completed in 2023.
Among the pillars of the new energy cooperation plan, the two sides reaffirmed their commitment to the long-delayed Pakistan Stream gas pipeline project, also known as the North-South gas pipeline, that is to be built in collaboration with Russian companies.
The two countries agreed in 2015 to build a 1,100 km (683 mile)-long pipeline to deliver imported liquefied natural gas (LNG) from Karachi on the Arabian Sea coast to power plants in the northeastern province of Punjab.
“Both sides agreed that Pakistan Stream Gas Pipeline Project should be considered in terms of a comprehensive infrastructure which is economically viable for sustainable gas infrastructure development ensuring affordable gas supplies,” the statement said.
Pakistan’s energy procurements from international markets constitute the largest portion of its import bill, putting immense pressure on rapidly depleting forex reserves that plummeted to $4.3 billion earlier this month. Islamabad has also faced problems in recent months in purchasing liquefied natural gas (LNG) from the global market due to spot prices that largely remain out of its reach since the invasion of Ukraine.
Local news outlets have also reported that oil supplies have remained tenuous due to issues with clearing import payments.