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Russian Oil and Gas Sales to Pakistan: What Are the Challenges?

Russian Oil and Gas Sales to Pakistan: What Are the Challenges?

Russian oil and gas sales to Pakistan. Pakistan is diversifying its energy needs and recently imported gas and oil from Russia has cheered a segment that believes these imports are cheap. However, experts have other concerns. Last month, the Russian Embassy in Pakistan announced on social media platform X that Islamabad had received its first shipment of Liquefied Petroleum Gas (LPG) from Russia. The message further said that Moscow has delivered 100,000 metric tons of liquefied petroleum gas to Pakistan through Iran’s Sarkhus Special Economic Zone. In June this year, 45 thousand metric tons and 56 thousand tons of Russian crude oil were supplied to Pakistan through two shipments.

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Import of Russian Crude Oil

The prime minister at the time was Shehbaz Sharif, who called the import of Russian crude oil a “day of change” for his country. Shahbaz Sharif said, “I have fulfilled another promise made to my nation.” This is Russia’s first oil cargo supply to Pakistan and it is the beginning of a new relationship between Pakistan and the Russian Federation.

Old Administration of the Country

However, a section of Pakistan believes that the hopes of the new and old administration of the country are not as realistic as they seem. Some Pakistanis believe that such imports could create political problems for Islamabad, as well as a number of challenges for Pakistan’s dollar-starved economy. According to a report by the English daily Express Tribune, Pakistan has five major oil refineries, with a combined production capacity of a little over 417,000 barrels per day. But these refineries are operating at half their capacity.

Technical Issues

Pakistan has been importing oil and gas from Arab countries and the technical infrastructure of Pakistan was built keeping in mind these imports from the Gulf. According to some estimates, the price of Russian crude oil is $60 per barrel and Gulf crude oil is $84 per barrel, but there are many constraints behind this cheap crude oil or gas supply.

Our Refineries

Rana Abrar Khalid, an analyst based in Islamabad, believes that Pakistan does not have the technological capacity to refine Russian crude oil. “Our refineries can refine the light crude imported from the Gulf,” he says, telling the foreign news agency that Russian oil is heavy, which cannot be easily processed through the tubes that Pakistani refineries have. can be done According to Rana Abrar, “We tried blending heavy Russian crude oil with light crude oil from the Gulf but the experiment was not entirely successful.”

Financial Problems

The West, particularly the US, has imposed a number of sanctions on Moscow. Making it difficult for countries like Pakistan to trade with the world’s largest country by land. Abrar Khalid believes that Pakistani companies or the government cannot make payments through the “SWIFT system”. Russia has its own payment mechanism but Pakistan is unable to follow it.

Country’s Finance Minister

Another important impression is that Pakistan will have to tell the IMF the exact price of Russian oil and gas. But the country’s Finance Minister Dr. Shamshad Akhtar dispels this impression. “There is no such provision in our agreement with the IMF.” He said in an interview with foreign news agency.

Sufficient Liquidity for all Payments

He added that the country has sufficient liquidity for all payments. “All payments for imports, including oil and gas, are made in dollars.” He said in response to a question on payment arrangements, without naming Russia.

Russian Oil
On X, he wrote, “I have fulfilled another promise to the nation. This is the first Russian oil cargo to reach Pakistan, starting a new relationship between Pakistan and the Russian Federation.”

Political Issues

Pakistan is restoring its relations with Washington. Islamabad received an IMF package in recent months. And the country is also receiving loans from the World Bank. Asian Development Bank, and other regional and global financial institutions. Many people in Pakistan believe that such financial assistance to Pakistan is not possible without the support of the US and its allies. International Islamic University expert Dr. Noor Fatima says that Washington is keeping an eye on these oil and gas contracts.

Agreements with Pakistan

In response to a question about the details of such agreements with Pakistan. Dr. Fatima said, “The United States fears that such deals may bring Pakistan closer to Moscow.” America will never be happy if we move closer to Russia or trade with Moscow. But we should give priority to our national interests instead of paying attention to American pressure.” However, some experts are also concerned that Washington may impose indirect sanctions. On Pakistan if it moves closer to Russia or continues to buy oil and gas from Moscow.

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