Pakistan Secures Favorable Oil Deal with Russia, Benefits from Lower Rates

 Pakistan's Oil Purchase from Russia: Favorable Terms and Enhanced Energy Security

ISLAMABAD: Speaking to reporters, Pakistan's State Minister for Petroleum, Musadik Malik, revealed that the government has secured a favorable oil purchase agreement with Russia. However, he refrained from disclosing the specific commercial terms of the deal, citing contractual obligations.

Malik emphasized that Pakistan was receiving advantageous rates under the agreement with Russia, ensuring that these benefits would be passed on to the public. He also questioned the need for Pakistan to disclose its contractual terms when other countries do not reveal their agreements with Russia.

The minister announced that Pakistan had received its first shipment of Russian oil in 75 years, signifying a significant milestone in bilateral relations. The cargo, consisting of 45,142 metric tons of crude oil, arrived at the Karachi Port Trust (KPT). Malik further stated that Pakistan plans to import more oil from Russia in the future, aiming to fulfill one-third of its oil import requirements from Russia while offering consumer discounts.

Malik disclosed that Pakistan had procured 100,000 tonnes of Ural Oil, which is a relatively light crude, from Russia. Samples of this crude have already undergone testing to ensure compatibility with Pakistani refineries.

Regarding the limitations of local refineries, Malik acknowledged their reliance on Arabian Light Crude due to outdated hydro-skimming technology. He acknowledged that these refineries cannot process a significant portion of Russian crude, which necessitates upgrading the refining infrastructure.

To address this issue, the government has approved refineries and tight gas policies. Malik also revealed that discussions are underway for a $10 billion investment from a Gulf Cooperation Council (GCC) country to establish a new oil refinery in Pakistan. The government aims to finalize this contract before its tenure ends, demonstrating its commitment to modernizing the refining sector.

In addition to the oil agreement with Russia, Malik mentioned a contract under review with Azerbaijan. If approved, this contract would provide distressed LNG cargo to Pakistan every month at lower prices compared to the international market. Pakistan retains the option to accept or cancel the cargo as per the contract terms.

Malik highlighted recent diplomatic engagements, including a visit from a Turkmenistan delegation and the signing of a joint implementation plan. He also mentioned Pakistan's efforts to attract European countries to establish LNG manufacturing units, positioning the country as a key transit route for gas transportation from Central Asian countries to Europe. These initiatives contribute to enhancing regional energy security.

During a recent visit to the United States, discussions were held to explore the introduction of green hydrogen and ammonia in Pakistan. Malik emphasized the significant gas consumption by the fertilizer sector and the need to diversify energy sources.

Pakistan's favorable oil purchase rates from Russia and its endeavors to expand energy partnerships demonstrate the government's commitment to meeting the country's energy needs while ensuring affordability for the public. These initiatives also contribute to regional energy security and the exploration of cleaner energy options for sustainable development.