According to a Reuters report, Pakistan has paid for its
first government to government import of discounted Russian crude in Chinese
currency. It is a significant shift in its US dollar dominated export payments
policy.
Discounted crude offers respite as Pakistan faces an acute
balance of payments crisis, risking a default on its debt obligations. The
foreign exchange reserves held by the central bank are scarcely enough to cover
four weeks of controlled imports.
The first cargo of discounted Russian crude oil arranged
under a new deal struck between Islamabad and Moscow earlier this year arrived in
Karachi on Sunday. It is currently being offloaded at the port in the southern
city of Karachi.
Petroleum Minister Musadik Malik, talking to Reuters by
phone, did not disclose the commercial details of the deal, including pricing
or the discount that Pakistan received, but said the payment was made in
Chinese currency.
He said
the purchase, Pakistan's first government-to-government (G2G) deal with Russia,
consisted of 100,000 tons, of which 45,000 tons had docked at Karachi port and
the rest was on its way. Pakistan made the purchase back in April.
Pakistan's purchase gives Moscow a new outlet to add to
growing sales to India and China, as it redirects oil from western markets
because of the Ukraine conflict.
Despite being a long-standing Western ally and the
arch-rival of neighbouring India, which historically is closer to Moscow,
analysts say the crude deal also presents a new avenue for Pakistan at a time
that its financing needs are great.
Pakistan's Refinery Limited (PRL) will initially refine
the Russian crude, the minister said. He had earlier referred to the purchase
of the shipment as a trial run to judge financial and technical feasibility.
Malik on Monday played down concerns around the financial
viability and concerns about the ability of local refineries to process Russian
crude given the South Asian country's historical importation of Middle Eastern
petroleum products.
"We've run iterations of various product mixes, and in
no scenario will the refining of this crude make a loss," Malik said,
adding, "We are very sure it will be commercially viable."
"No
adjustments (were) needed at the refinery to refine the Russian crude,"
the minister told Reuters.
Energy imports make up the majority of the Pakistan's
external payments. Islamabad imported 154,000 bpd of oil in 2022, around steady
with the previous year, data from analytics firm Kpler showed.
The
crude was predominantly supplied by the world's top exporter Saudi Arabia
followed by the United Arab Emirates. The 100,000 bpd from Russia in theory
greatly reduces Pakistan's need for Middle Eastern fuel.