Pakistan to buy discounted Russian oil to ease economic pains
Pakistan will purchase oil from Russia at a discount starting in 2023, Islamabad’s minister of state for petroleum announced this week, raising hopes of some respite for the South Asian country’s cash-strapped economy.
Last week, Musadik Malik, the country’s petroleum minister, visited Russia to negotiate as Moscow faces intensifying global export curbs as punishment for its invasion of Ukraine. Upon his return to Islamabad on Monday, Malik told reporters that “Russia has decided to provide Pakistan crude [oil] at discounted rates. Russia will also give [gasoline] and diesel to Pakistan at lower prices.”
But Pakistan will likely have to wait until at least 2025 to secure a deal with Moscow for liquefied natural gas, even as it heads into winter with a severe gas shortage. “Russia was short on LNG because of international pressure,” Malik said. “They have invited Pakistan to begin talks on long-term contracts for 2025 and 2026.”
Experts who spoke with Nikkei Asia were broadly optimistic about the arrangements to help foreign-reserve-starved Pakistan, downplaying concerns that doing business with Russia could affect Islamabad’s crucial relationship with the U.S.
“Pakistan can purchase up to 4.3 million tonnes of oil from Russia at discounted rates from next year,” a Pakistani government official privy to the negotiations told Nikkei Asia on condition of anonymity. According to the Oil and Gas Regulatory Authority, Pakistan’s annual oil consumption is 19.92 million tonnes.
The official added that a delegation from Russia will visit Pakistan in January to determine the exact price. Still, while the anonymous Pakistani official conceded that shipping costs for oil imported from Russia will be high, the discounts will easily cover the expense.
Experts also had reservations about the quality of Russian crude and the resources required to refine it. They said certain varieties of Russian oil would lead to faster degradation of machinery in oil refineries. The government official pushed back on this too, however, saying that “most of the oil Pakistan plans to import from Russia will already be refined.”
