Russian Energy Minister Nikolay Shulginov said on Friday that Pakistan could import discounted Russian oil from March if it agrees to stipulations, including making payments in “friendly” countries’ currencies instead of dollars.
Overview
The Russian minister said that the two countries “conceptually agreed” on a deal for crude oil and petroleum products. The agreement will address all related issues, including logistics, insurance, payments, and volumes, and will be signed by March.
Speaking at a joint press briefing alongside Pakistani Economic Affairs Minister Ayaz Sadiq, Shulginov said that both sides had finalised the timeline for the agreement.
A delegation led by the Russian Energy Minister, Mr Nikolay Shulginov called on Prime Minister Muhammad Shehbaz Sharif in Lahore today.
— Prime Minister's Office (@PakPMO) January 19, 2023
Welcoming the delegation the Prime Minister highlighted the importance Pakistan attached to its relations with the Russian Federation. pic.twitter.com/8Itj7yp65R
He further said that Pakistan could approach Russian gas companies, Gazprom and Novatek, and discuss the spare capacities to extend supplies immediately.
The decision comes amid a Pakistani delegation’s visit to Ankara to meet Shulginov for the annual bilateral meeting on trade and economy. According to sources quoted by Reuters, the agreement’s details are yet to be finalised.
Pakistan is seeking to secure around 100,000 barrels of Russian crude oil each day for $60 per barrel instead of the market price of $70-$74.
Pakistan’s Response
Speaking to Geo TV, Pakistani Minister of State for Petroleum Musadik Malik highlighted that Islamabad seeks to import 35% of its crude oil needs. Malik said that Pakistan’s shortage of dollars had compelled it to trade in different currencies to secure oil.
He added, “All these things will be finalised in the next 60 days, so that by the end of March the oil supply starts from Russia.”
Briefly discussed my views on the visit of Russian delegation and impacts of cheaper energy supplies on PTV World (@WorldPTV)
— Dr. Khalid Waleed (@KhalidWaleed_) January 19, 2023
1. Depletion of domestic Reserves📉
2. Russian Oil is 30 percent cheaper🛢️
3. LNG shortage due to conflict🪖
🇵🇰🇷🇺🛢️🪖✌️#Pakistan #Russia #Energy pic.twitter.com/C8MPW8qywV
Pakistan’s Energy Struggle
As Pakistan’s foreign reserves dropped to $11 billion in December, it only has enough for three weeks of imports. Resultingly, it is struggling to secure enough oil for its energy consumption, which accounts for most of its import expenses.
To this end, PM Shehbaz Sharif demanded that federal departments reduce power consumption by 30%. Shops have further been directed to close down by 8:30 p.m.
Pakistan witnessed its 4th country wide power breakdown in the past 3 years, today, again at 734am PKT. The ministry incharge indicates that it can take upto 27hours for a full fledge restoration of electricity supply across the country.
— Anas Mallick (@AnasMallick) January 23, 2023
Amid these shortages, a nationwide power cut in Pakistan left over 200 million people without electricity in the early hours of Monday. The power cut impacted major cities, including Karachi, Lahore, Islamabad, Peshawar, and Quetta. Concerningly, 90% of the power supply in Karachi was suspended.
The power cut was attributed to a “frequency variation.”