On Monday, Pakistan’s Petroleum Minister revealed that the South Asian nation paid for its first government-to-government import of discounted Russian Crude using Chinese currency, making it a significant change from its prior export payment policy that favored the U.S Dollar.
As Pakistan experiences a severe balance of payments crisis and faces the possibility of defaulting on its debt obligations, discounted crude offers relief. The central bank’s foreign exchange reserves hardly have enough money to last four weeks of controlled imports.
The project took place under a new deal struck between Moscow and Islamabad earlier this year and arrived in Karachi on Sunday. The cruise is currently offloaded at the port in the Southern city of Karachi.
Musadik Malik, petroleum minister did not revel the details of the deal. He even did not disclose the prices, or the compensation Pakistan recieved, but he revelaed that the has been done in Chinese currency.
Musadik Malik said that Pakistan’s first government to government (G2G) deal with Russia,consisted of 100,000 toners,of which 45,000 tonnes had docked at Karachi port and the rest was on its way. Pakistan made the purchase back in April.
The deal and opened the doors of foreign investors and governments to come and invest in Pakistan. Though, the deal gives Moscow a new outlet to add to growing sales to China and India. As it redirects oil from western markets because of the Ukraine conflict.
Analysts claim that the crude deal also presents a new avenue for Pakistan at a time when it’s financing needs are great despite being a longtime western alley and the arch-rival of the neighbouring country India. If we look closely India is historically closer to Moscow.
Pakistan Refinery Limited (PRL) will initially refine the Russian Crude, as per the minister.
He referred the purchase of shipment as a trial run to gage the financial and technical feasibility. According to him, through this Pakistan will have an idea about the crude and it’s technicalities and performance.
On Monday, Musadik Malik, showed his concerns and worries about the financial viability of the project as well as worries about the capacitive sof local refineries to process Russian Crude.
“We have run iteration of various product mixes, and in no scenario will the refining of this crude make a loss”.
In addition, he also stated that,” we are very sure it will be commercially viable,no adjustments needed at the refinery to refine the Russian Crude”
Though,energy imports are important for Pakistan to advance it’s system and enhance the efficiency of different departments. As energy imports make up the majority of Pakistan’s external payments.
Moreover,Islamabad imported 154,000 BPD of oil in 2022, in comparison to previous year data.
Saudi Arabia, the top exporter in the world, and the United Arab Emirates were the main suppliers of the crude. The 100,000 bpd from Russia should significantly reduce Pakistan’s reliance on fuel from the Middle East.