Is Pakistan Contemplating Buying Russian Oil on Deferred Payments?

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The former PTI-led government of Pakistan had claimed that there were official agreements between Pakistan and Russia for the import of Russian oil at an attractive price.

However, Minister of State for Petroleum Musadik Malik denied those claims when speaking to a news channel. He did, however, agree that Pakistani government was “open to the idea of importing cheap oil from Russia”.

Malik also revealed that the previous government had sent a letter to Russia about that. He further said on the topic that:

 “Since coming to power, the coalition government has tried following up on the letter but has so far received no response from Russia.”

However, news of recent follow-up on this matter was let slip by an official who was part of the delegation. He revealed that Prime Minister Shehbaz Sharif has held at least three meetings with Russian president Putin. One of which was formal and the rest two were informal, as stated by the official.

He reported that,

“What we have discussed during the recent interaction with the Russian side is the possibility of importing oil on deferred payment.”

Russia has shown inclination to consider the proposal, the official said.

Pakistan would be undercutting the global economic crisis by importing Russian oil if the proposal eventuates. The current refining capacity of Pakistan, 417,000 b/d, does not meet 40% of the fuel requirements of its population. Pakistan has only imported oil from the Gulf countries, Saudi Arabia and U.A.E. in past.

An official at the research centre said importing crude from Russia would help to ease the pressure on the country’s foreign exchange reserves. Moreover, industry and market sources estimated that Russian oil would cost at least 30% less per barrel than Middle Eastern crudes for Pakistani refiners.

However, importing fuel from Russia might result in opposition by the United States. It will be more economically disastrous for Pakistan to test the patience of the United States and other Western powers that have sanctions on Russia.

U.S. has never explicitly asked Pakistan not to import oil from Russia. Although, as a source from the foreign office revealed, it has “advised us that it is better if we don’t enter into such venture with Russia”.

Importing Russian oil instead of Arab crude might also disturb Pakistan’s relationship with the Arab world. Pakistan has built that relationship over decades and there is no way it should be jolted this way!

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Hamna M.
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