Pakistan has announced that it will be buying cheap Russian oil to cushion the current energy crisis that emanated due to the balance of payment crisis.
Pakistan has also been unable to procure oil after the banks refused to settle letters of credit (LCs) for the import of crude and petroleum products. The country’s foreign exchange reserves have lately depleted to about $4.6 billion, barely enough to cover three weeks of imports — mostly for oil.
Russian Energy Minister Nikolay Shulginov, who is in Islamabad for the annual inter-governmental commission on trade and economy, said that they are in the final stages of the agreement and added that the oil exports will begin by end of March.
He further announced that the payments will be made in the “currencies of friendly countries,” without elaborating on which currency would be used.
“We have already decided to draft an agreement to sort out all the issues that we have with regard to transportation, insurance, payments and volumes. These issues are in the final stage of the agreement,” Shulginov said in a statement on Saturday.
“We have already established a timeline of this agreement by the end of March,” the Russian minister added.
The development comes at a time when the Group of 7 (G7) countries are reviewing the price cap on exports of Russian oil. They are scheduled to meet in March.
Earlier in December, the Pakistani government announced that Russia had agreed to export oil to the energy-starved country at a reduced price.
In an interview to Geo News TV later in the day, Pakistani junior oil minister Musadik Malik said that the country is looking to 35 per cent of its total crude oil requirement.
“If we have dollars in excess, then we are ready to do the trade in dollars, and if there is a shortage of dollars and we have some other currency in our reserves, we are ready to trade in that.”
“All these things will be finalised in the next 60 days, so that by the end of March the oil supply starts from Russia.”
Oil takes the lion’s share of Pakistan’s import bill. Islamabad has traditionally been importing from Saudi Arabia and the United Arab Emirates. This is the first time they would be procuring Russian oil.
(With inputs from agencies)
