ISLAMABAD: Pakistan’s potential oil import deal with Russia will go a long way in addressing the growing energy needs of Islamabad and helping the country cut back on its burgeoning oil import bill.
It is to mention here that Pakistan is the 35th largest crude oil importer in the world. In 2021, Pakistan spent $1.92 billion on import of crude oil. Russia’s cheap oil will undoubtedly relieve Pakistan’s economic stress.
Speaking to WealthPK, Dr Ayub Siddiqui, Dean Faculty of the FAST School of Management, said that a potential oil deal with Russia would have a greater impact on Pakistan’s economy. “Oil products make up a major share of Pakistan’s cumulative import bill, so if Pakistan starts importing cheap oil from Russia, it can greatly help shrink the import bill. The saved foreign exchange can be utilised for development of the export-oriented sectors to spur economic growth.”
Speaking at a news conference, Minister of State for Petroleum Musadik Malik claimed that Pakistan would receive discounted crude oil from Russia, as well as a discount on refinery products like petrol and diesel.
He, however, didn’t mention the rate of the discounted oil and only said that the rates were going to be discussed in January.
Ayub Siddiqui further said that the potential Islamabad-Moscow oil deal would not only benefit Pakistan in terms of importing less expensive oil, but it would also help put the other projects pending with Russia back on track.
One of these projects is the Central Asia-South Asia power project, commonly known by the acronym CASA-1000. It is a $1.16 billion project currently under construction that will allow for the export of hydroelectricity to Afghanistan and Pakistan.
“This project can also be resumed if Pakistan and Russia strike an oil deal,” Ayub Siddiqui underscored.
He said trade with Russia was beneficial for Pakistan, but currently, the trade volume between Islamabad and Moscow stood even below $1 billion.
Siddiqui pointed out that there were some elements that may hinder the oil deal as currently Pakistan is in the International Monetary Fund programme. “International sanctions on Russia will cause difficulties for Pakistan in dealing with Russia.”
He, however, expressed optimism that the European nations and the US won’t create hurdles in the way of the oil deal as the US has allowed lower and middle-income countries to get the Russian oil at discounts to meet their growing energy needs amid global economic downturn.
Ayub Siddiqui said that India has struck an oil deal with Russia, and is getting the Russian crude at 30% discount.
“With the support of friendly countries, Islamabad can still make a successful deal with Moscow,” said Siddiqui.
He further said two important members of the Organisation of the Petroleum Exporting Countries, the Kingdom of Saudi Arabia and the United Arab Emirates, can play an important role in making Pakistan-Russia deal successful.
“The agreement with Russia will benefit Pakistan in many ways. If we import less expensive oil from Russia, it will decrease the import bill and the amount saved from oil imports can be used to import raw materials for the export-oriented sectors to enhance exports and increase the foreign exchange reserves,” Siddiqui
