Pakistan on Monday began transporting the much-anticipated discounted Russian crude oil to a refinery here in the cash-strapped country's port city, a development that is likely to provide relief to the people hit by skyrocketing inflation. The first shipment of discounted Russian crude oil arrived in Karachi on Sunday after an agreement was inked between Islamabad and Moscow in April.
Out of the 45,000 metric tonnes of crude oil, 3,000 metric tonnes were offloaded from the Russian ship to Pakistan Refinery Limited, Geo TV reported. The Russian crude, which took more than 20 days to reach Pakistan, will be entirely shifted to the refinery tomorrow, the report said. The Russian crude is reported to have come to Pakistan at USD 50-52 per barrel against the price cap of USD 60 per barrel imposed by the G7 countries, it said.
“I have fulfilled another of my promises to the nation. Glad to announce that the first Russian discounted crude oil cargo has arrived in Karachi and will begin discharge tomorrow,” Prime Minister Shehbaz Sharif said in a tweet on Sunday. “Today is a transformative day. We are moving one step at a time toward prosperity, economic growth, and energy security & affordability,” he said.
Sharif added that this was the beginning of a “new relationship between Pakistan and the Russian Federation.” After refining the crude, a test report would be submitted to the government on the quality, yields, transportation cost, and commercial viability of the crude oil, according to The News. Following the approval, the government will go for a long-term government-to-government deal with Russia, the report said.
The payment for the Russian crude will be made in the Chinese currency of Yuan through the Bank of China, Geo News reported. Pakistan, which is currently grappling with high external debt and a weak local currency, is hoping that snapping crude at discounted rates from Russia will stabilise oil prices in the country. Petrol now costs Rs 262 per litre in the country after the latest revision.
Pakistan, which is currently grappling with high external debt and a weak local currency, is hoping that snapping crude at discounted rates from Russia will stabilise oil prices in the country. Energy accounts for the biggest share of Pakistan’s imports, and cheaper oil from Russia will help Pakistan in containing the ballooning trade deficit and balance-of-payments crisis.
Last year, Pakistan imported around 154,000 barrels per day, with around 80 per cent of its supplies coming from Saudi Arabia, the UAE and other Gulf nations. During the week ending June 2, the total foreign exchange reserves in the country fell to around USD 3.9 billion, the State Bank of Pakistan data revealed. Pakistan's inflation rate accelerated to 38 per cent in May from the record high of 36.4 per cent in April, according to the central bank data.
The cataclysmic floods last year inundated a third of the country, displaced more than 33 million and caused economic damages to the tune of USD 12.5 billion to Pakistan’s already teetering economy. Pakistan and the IMF have failed to reach a staff-level agreement on the much-needed USD 1.1 billion bailout package aimed at preventing the country from going bankrupt.
The funds are part of a USD 6.5 billion bailout package the IMF approved in 2019, which analysts say is critical if Pakistan is to avoid defaulting on external debt obligations. Pakistan’s purchase gives Russia a new customer for its crude, apart from India and China. Since the Ukraine war unravelled last year, the US and other Western nations have unleashed a series of crippling economic sanctions on Russia.
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