No special deal for Pakistan as it buys Russian oil in Chinese yuan

By Staff Reporter

ISLAMABAD: Pakistan has bought Russian crude oil for the first time, paying in Chinese yuan, but did not receive any special discount on the price, Russian and Pakistani officials said on Friday.

The shipment of 100,000 metric tons of oil arrived in Karachi on Thursday and the payment was made in yuan. The cargo would help to reduce local oil prices in a few weeks.

However, Russian Energy Minister Nikolai Shulginov said there was no special discount for Pakistan and that the payment was made in “the currencies of friendly countries”.

“Oil deliveries to Pakistan have begun. There is no special discount; for Pakistan, it is the same as for other buyers,” Shulginov told reporters on the sidelines of an international economic conference in St. Petersburg.

Shulginov said that the two countries were still discussing the price of liquefied natural gas (LNG) exports to Pakistan.

“The discussion is about long-term contracts, but so far, we are talking about spot supplies and spot gas prices are now high,” Voice of America reported Shulginov as saying.

Pakistan is facing a severe economic crisis, with its foreign exchange reserves at a record low and its currency under pressure. The government is seeking to revive a $6.7 billion International Monetary Fund (IMF) bailout package, which has been stalled for months.

The purchase of Russian oil is part of Pakistan’s efforts to diversify its energy sources and reduce its reliance on imports from the Middle East. The country has also been looking to increase its trade with China, which has a currency swap agreement with Pakistan.

The deal to buy Russian oil in yuan is a significant shift for Pakistan, which has traditionally used the U.S. dollar for its foreign trade. It is also a sign of the growing ties between Pakistan and China.

Pakistan’s Petroleum Minister Musadik Malik said the supply of Russian ‘Urals’ crude would be streamlined in the next few months and would be blended with Arabian light crude at different ratios by Pakistani refineries.

He said Pakistan would still get a significant benefit from using Russian oil, even though it would increase the production of furnace oil, which would have to be exported at a loss.

He declined to give details of the financial terms of the deal, calling them confidential.