The first oil cargo from Russia is expected to arrive in Pakistan by the end of April after the latter agreed to the former’s demand to import a single cargo first as a test case to bridge “trust deficit”.
Moscow has already offered to export 100,000 barrels of crude oil per day to Islamabad. Following Saudi Arabia that also exports around 100,000 barrels of oil per day, Russia will emerge as the second largest crude oil supplier to Pakistan if the both the countries sign a deal.
Sources told The Express Tribune that Russia had raised doubt “over the seriousness of Pakistan to mature the oil deal”. Therefore, in a recent meeting held between the two countries, Moscow had asked Islamabad to import “one oil cargo” as a test case. The sources said that Russia had heavy crude oil but Pakistan lacked the technology to refine such oil, therefore, it agreed to export blended oil to the country.
However, Moscow asked Islamabad to import “one crude oil cargo” first to exhibit trust in the oil deal. Following Russian demand, sources said that Islamabad agreed to import “one crude oil cargo” by the end of April this year, paving way for a bigger deal.
As Pakistan faces dollar crunch, it could be a challenge for the country to pay for Russian crude oil in the same currency. Earlier, a foreign company had offered a Pakistani refinery to import Russian crude oil but the Pakistani banks had refused to make payment.
Russia has now agreed to receive payment in three currencies – Russian rubble, Chinese yen and UAE dirham against the supplies of crude oil to Pakistan. Sources said that the State Bank of Pakistan (SBP) and Russian counter bank were pondering over a payment mechanism for the oil import in three currencies other than dollars.
Sources said that Pakistan had planned to set up a new Special Purpose Vehicle (SPV) company that would be responsible for the import of Russian oil to the Pakistani refineries.This will be a state-run company which would also deal with the Russian side on all matters regarding the import and payment of oil.
Courtesy Express Tribune