[vc_row][vc_column][vc_column_text dp_text_size=”size-4″]ISLAMABAD: The first oil cargo from Russia is likely to arrive in Pakistan by the end of April after the latter consented to the former’s desire to import a single cargo first as a test case to bridge “confidence deficit”.
Moscow has already offered to supply Islamabad with 100,000 barrels of crude oil per day.
Following Saudi Arabia, which sells roughly 100,000 barrels of oil per day, Russia will become Pakistan’s second largest crude oil supplier if the two countries reach an agreement.
According to sources, Russia questioned “Pakistan’s earnestness” in completing the oil contract. As a result, during a recent meeting between the two countries, Moscow requested that Islamabad import “one oil cargo” as a test case.
According to sources, Russia had heavy crude oil but Pakistan lacked the equipment to refine it, so Moscow agreed to send mixed oil to the country.
But, Russia requested that Islamabad first acquire “one crude oil cargo” to demonstrate its confidence in the oil contract.
According to reports, Islamabad agreed to buy “one crude oil cargo” by the end of April this year in response to Russian demand, clearing the way for a larger agreement.
Payment method
With Pakistan facing a dollar crisis, it may be difficult for the government to pay for Russian crude oil in the same currency.
Before, a foreign business offered a Pakistani refinery to import Russian crude oil, but Pakistani banks refused to pay.
Russia has now agreed to accept payment in three currencies: Russian rubles, Chinese yen, and UAE dirham in exchange for crude oil shipments to Pakistan.
According to sources, the State Bank of Pakistan (SBP) and its Russian counterpart were discussing a payment method for oil imports in three currencies other than dollars.
According to sources, Pakistan planned to establish a new Special Purpose Vehicle (SPV) company to handle the import of Russian oil into Pakistani refineries.
This will be a state-run firm that will also deal with the Russian side on all oil import and payment issues.
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Pricing
Following Russia’s invasion on Ukraine, the price of oil has skyrocketed, with European Union countries now facing a potential shortage of petroleum goods this year.
There had also been concerns that the world’s diesel inventories were rapidly dwindling. Almost all sectors in Pakistan have recently been confronted with the issue of LC opening.
Analysts think it will be a huge relief for Pakistan if it can reach an energy deal with Russia and pay in currencies other than the US dollar.
According to sources, Islamabad had previously intended to strike the oil agreement with Moscow at the G-7 price ceiling.
The US had even reached an agreement with Pakistan on the subject.
But, Russian President Vladimir Putin stated that Russia would not negotiate with a country that wants to import oil at a fixed price.
Pakistani officials had indicated that Islamabad will acquire crude oil from Russia at a 30% discount. Russia, on the other hand, has denied any such development.
According to sources, Pakistan and Russia have yet to finalise the pricing of Russian crude, and negotiations are ongoing as Islamabad hopes to secure “substantial discounts” from Moscow.[/vc_column_text][/vc_column][/vc_row]
