Pakistan Receives First Shipment of Russian Crude Oil
Pakistan has received its first shipment of Russian crude oil under an agreement signed between the two countries in April. The cargo carrying 45,000 metric tonnes of crude oil arrived at the southern city of Karachi on Sunday while another 50,000 metric tonnes is expected to arrive later this week. The Pakistan Refinery Limited (PRL) will process the crude oil. Prime Minister Shehbaz Sharif called the arrival of the Russian crude a “transformative day” for the crisis-ridden country.
Benefits of the Deal
Russia has been slapped with sanctions from the Western powers after it invaded Ukraine last year, cutting its oil and gas exports to the European Union and the United States. The Pakistan deal gives Moscow a new oil market after India and China as the Ukraine conflict rages on. Musadik Malik, Pakistan’s junior minister for petroleum, told a private news channel on Monday that petrol prices in the country will fall once the supply from Russia starts on a regular basis. “If we start getting one-third of our crude oil from Russia, then there will be a big difference in prices and its effect will reach people’s pockets,” he said.
Economic Crisis in Pakistan
Pakistan, the world’s fifth most populous country, is reeling under a severe economic crisis, resulting in a shortage of foreign currency to pay for fuel imports. The oil shipment comes at a time when the country has less than $4bn in foreign reserves, enough to cover less than four weeks of import. Islamabad is also waiting to receive a $1.1bn bailout package from the International Monetary Fund (IMF) as part of a $6.5bn loan programme expiring this month.
Expert Opinion
Farhan Mahmood, an energy sector analyst, told Al Jazeera that Pakistan imports nearly 80 percent of its domestic petroleum requirement, racking up an import bill of $13bn in 2022-23. But he forecast a fall in demand for the next financial year. “Looking at the gradual decline we are seeing in petroleum usage, we forecast that the import bill may reduce to $10bn,” he said. “This import is part of a pilot project but to expect it will immediately make a difference is wrong.”
Conclusion
The arrival of the first shipment of Russian crude oil in Pakistan is a significant development for the country, which has been facing an economic crisis due to a shortage of foreign currency to pay for fuel imports. The deal with Russia gives Pakistan a new oil market and could lead to a fall in petrol prices in the country. However, experts believe it will be too soon to say if the deal will provide significant benefit to domestic consumers.