According to a statement made by Russia’s energy minister, if the terms are agreed upon, Russia could begin shipping oil to Pakistan, which lacks energy, after March. The country is also discussing with Islamabad the possibility of paying in the currencies of “friendly” nations.
Pakistan has been struggling with a problem with its balance of payments. Its foreign exchange reserves have decreased to $4.6 billion, which is barely enough to cover three weeks’ worth of oil imports.
It stated in October that it was considering purchasing discounted Russian crude, citing India, a neighbor, as an example.
Officials from Pakistan and Nikolay Shulginov, the Russian Energy Minister, who is in Islamabad for an annual intergovernmental commission on trade and economy, said on Friday that the main parts of the deal hadn’t been agreed upon.
According to the Russian state news agency RIA Novosti, Shulginov told reporters in Russian, “As for the supply of crude oil and petroleum products, we conceptually agreed on the development and signing of an agreement that will determine and resolve all issues of logistics, insurance, payment, and volumes.”
Additionally, Shulginov stated that “negotiations are going on” regarding settlement in the currencies of “friendly” nations, which refers to non-Western nations that have not imposed economic sanctions on Russia as a result of the latter’s invasion of Ukraine. Typically, oil is purchased in dollars.
According to RIA, Shulginov stated that the parties had “established a timeline of this agreement in our joint statement — which is late March.”
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Trade in alternate currency
Separately, Musadik Malik, the junior oil minister of Pakistan, stated to Geo News TV that Islamabad wanted to import 35% of its total crude oil requirements.
“Added he: We are prepared to trade in dollars if we have more than enough, and we are prepared to trade in any other currency we have in reserve if we are short of dollars.
“All of these things will be finished in the next 60 days, so Russia will start supplying oil by the end of March.”
The majority of Pakistan’s import costs come from energy purchases.
Read: US bans Russian oil: What is next for oil and gas prices?
According to Shulginov, Russian gas companies might not be able to provide Pakistan with any supplies right now.
He stated, “We have decided that it would be a good idea for Pakistan to approach Gazprom and Novatek, two of the largest LNG producing companies, in late 2023 to discuss the conditions when they have spare capacities.” This was in response to Pakistan’s request for assistance.
Unlike India, Pakistan’s neighbor, Pakistan has never had significant commercial ties with Moscow, and as a long-standing ally of the United States, it has also been reluctant to do business or trade with Moscow in the past.
Given Pakistan’s close proximity, it currently relies on oil from Gulf nations, which frequently extend facilities like deferred payments and can supply at lower transport costs.
This winter, loadshedding has had an impact on domestic households as well as industries, including Pakistan’s textile manufacturing sector, which is one of the largest, with some plants being temporarily closed.
Source: TRTWorld and agencies