Islamabad: Cash-strapped Pakistan on Monday said Russia has agreed to provide it with crude oil as well as petrol and diesel at discounted rates, as Islamabad battles to contain a current account deficit swelled by energy payments, mostly for oil.
The development comes a month after Finance Minister Ishaq Dar said that Pakistan is exploring the possibility of buying discounted Russian oil on the lines of India.
Pakistan is struggling to meet domestic gas supply needs as winter approaches and is under pressure to explore cheaper energy supplies due to dwindling foreign exchange reserves. It is battling to contain a current account deficit swelled by energy payments, mostly for oil.
Addressing a press conference here, Minister of State for Petroleum Musadik Malik — who flew to Russia last week for negotiation on low-priced petroleum supplies — said his Moscow visit has been “more productive than expected”.
“Russia has decided to provide Pakistan crude oil at discounted rates…this is the oil that refineries use to produce diesel and petrol. Russia will also give petrol and diesel to Pakistan at reduced prices,” he said.
“The Russian government is setting up new factories for the production of LNG (liquefied natural gas) and they have invited Pakistan to begin talks on long-term contracts for 2025 and 2026,” Malik said.
His comments came as the executive body of the European Union has asked its 27-member countries to cap the price of Russian oil at USD 60 as part of the West’s attempt to squeeze Moscow’s oil revenues and limit its ability to wage war in Ukraine while keeping global prices and supplies steady.
The price caps are part of the EU’s plan to use its clout in insurance and shipping industries to crimp Moscow.
Under the price-cap system that kicked in on Monday, companies shipping Russian oil outside of Europe would only be able to access EU insurance and brokerage services if they sell the oil at or under USD 60.
Malik said gas supply from Pakistani wells was decreasing 8-10 per cent every year while the demand had increased as compared to the last year.
On the issue of laying gas pipelines in Pakistan, Malik said talks had begun with Moscow on two pipelines, including the Pakistan Stream (north-south pipelines) from Karachi to Lahore.
He said a Russian inter-governmental delegation would visit Pakistan in January next year and talks would be held on the gas pipeline and other projects.
India, the world’s third-largest crude importer after China and the United States, has been snapping Russian oil that was available at a discount after some countries in the West shunned it as a means of punishing Moscow for its invasion of Ukraine.
From a market share of just 0.2 per cent in India’s import basket before the start of the Russia-Ukraine conflict, Russia’s share of India’s imports rose to 4.24 million tonnes, or nearly 1 million barrels per day, in October, taking a 21 per cent share comparable to that of Iraq and higher than Saudi Arabia’s share of around 15 per cent.
Ahead of the EU restrictions on Russian oil, India had said it will continue to buy crude oil from anywhere in the world, including Russia, to meet its energy needs.
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