By Staff Reporter
KARACHI: Russia and Pakistan are negotiating a potential agreement in the oil sector that could expand cooperation in exploration, production and refining, as Islamabad pushes to cut import costs and Moscow hunts for new markets amid Western sanctions.
“All of these areas are Russia’s strengths. And we would be very happy if Russia agreed on an agreement in this sector with Pakistan,” Pakistan’s Finance Minister Muhammad Aurangzeb said in an interview with Russia’s RIA news agency published on Tuesday. “At present, the issue is being discussed by the energy ministries of both sides,” he added when asked about broader ties in the industry.
The talks come as Pakistan ramps up engagement with Russia, which has been redirecting energy exports away from Europe following sanctions imposed over its invasion of Ukraine. Islamabad, grappling with high energy bills and foreign-exchange shortages, began importing Russian crude in 2023 at discounted rates. Russian Energy Minister Sergei Tsivilev said in November that the two countries had discussed upgrading a refinery in Pakistan with involvement from Russian companies.
Aurangzeb also told RIA that Russia and Pakistan are exploring the construction of another steel plant in the South Asian nation.
The potential oil pact could help Pakistan diversify its energy sources beyond traditional suppliers in the Middle East, potentially easing pressure on its balance of payments. Russia, the world’s second-largest oil exporter, has boosted shipments to Asia, including India and China, to offset lost European demand. Pakistan’s oil imports totaled about $16 billion in the fiscal year through June, with crude and refined products making up a significant chunk of its energy needs. The country’s refineries have capacity to process around 400,000 barrels a day, but operate below full utilisation due to outdated infrastructure.
Officials from both sides have held multiple rounds of discussions on energy ties since 2022, including at intergovernmental commissions. Pakistan’s state-owned Pakistan State Oil Co. handled the initial Russian crude cargoes, which arrived via spot deals.
The steel plant initiative builds on existing Russian involvement in Pakistan’s metals sector. The Soviet Union helped build Pakistan Steel Mills in the 1970s, though the facility has faced operational challenges in recent years.
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