Prime Minister Shehbaz Sharif calls the arrival of Russian crude oil a “transformative day” for the crisis-ravaged country.
Islamabad, Pakistan – Pakistan received its first shipment of Russian crude under an agreement signed between the two countries in April, but experts think it will be too early to say whether the deal will help domestic consumers significantly.
The shipment of 45,000 tons of crude arrived in the southern city of Karachi on Sunday, with another 50,000 tons expected to arrive later this week, according to the Pakistan Refinery Limited (PRL), where the crude will be processed.
Prime Minister Shehbaz Sharif called the arrival of Russian crude oil a “transformative day” for the crisis-plagued country.
“I fulfilled another of my promises to the nation,” he tweeted. “This is the first-ever Russian oil shipment to Pakistan and the beginning of a new relationship between Pakistan and [the] Russian Federation.”
I have fulfilled another of my promises to the nation. Happy to announce that the first Russian shipment of discounted crude oil has arrived in Karachi and will start unloading oil tomorrow.
Today is a transformative day. We are moving step by step towards prosperity, economy…
— Shehbaz Sharif (@CMShehbaz) June 11, 2023
Russia has been hit by sanctions from Western powers after it invaded Ukraine last year and halted its oil and gas exports to the European Union and the United States. The deal with Pakistan gives Moscow a new oil market after India and China as the conflict in Ukraine continues.
Musadik Malik, Pakistan’s Deputy Petroleum Minister, told a private news channel on Monday that gasoline prices in the country will fall once supplies from Russia begin on a regular basis.
“If we are going to get a third of our crude oil from Russia, there will be a big price difference and the effect will reach people’s pockets,” he said.
Pakistan, the fifth most populous country in the world, is teetering 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 $4 billion in foreign reserves, enough to cover less than four weeks of imports. Islamabad is also awaiting a $1.1 billion rescue package from the International Monetary Fund (IMF) as part of a $6.5 billion loan program due to expire this month.
Al Jazeera contacted Malik to ask how the payment for the Russian oil was made, but he did not respond to questions.
Farhan Mahmood, an analyst in the energy sector, told Al Jazeera that Pakistan imports nearly 80 percent of its domestic petroleum needs, accounting for an import bill of $13 billion in 2022-23. But he predicted a fall in demand for the next fiscal year.
“If we look at the gradual decline in petroleum consumption, we predict that the import bill could fall to $10 billion,” he said. “This import is part of a pilot project, but expecting it to make an immediate difference is wrong.”