Malik has said that Pakistan looks forward to importing about 35 per cent of its total crude oil requirement from Russia Image Credit: PID

Islamabad: Pakistan is set to receive its first shipment of discounted oil from Russia in next month, the petroleum minister Musadik Malik has confirmed.

Malik said that the first shipment carrying 100,000 tonnes of crude oil will arrive in Oman on May 27. From there, the oil will be transported to Pakistan in smaller vessels due to the limited capacity of Pakistani ports to handle larger cargoes.

The minister emphasised the importance of the oil consignment, saying that Pakistan’s annual fuel (petrol and diesel) demand stands at 20 million tonnes, while local production only meets 10 to 11 million tonnes.

With the fuel demand expected to reach 34.33 million tonnes by 2032, the minister called for the construction of a refinery with a capacity of up to 400,000 barrels and stressed the necessity of crude oil storage for the energy sector.

Pakistan’s order for cheap Russian crude oil was placed under a new deal between Islamabad and Moscow in April to buy only crude oil, not refined fuels. Initially, Pakistan’s Refinery Limited (PRL) will refine the Russian crude, with other refineries joining in after a trial run. Malik earlier said that Pakistan looks forward to importing about 35 per cent of its total crude oil requirement from Russia. Islamabad wants to buy Russian oil at $50 a barrel, according to local media reports.

This import is vital to meet its energy needs and aims to alleviate the pressure on Pakistan’s balance of payments, as the country faces an acute financial crisis. The oil and energy imports accounted for over $23 billion in the financial year 2022, making up the largest portion of Pakistan’s imports.

Pakistan and Russia have also held discussions on the implementation of the $2.5 billion Pakistan Stream gas pipeline to build a 1,100-km-long gas pipeline to improve the availability of natural gas and meet the demands of Pakistani households and industries.

Meanwhile, Pakistan has reportedly approached the United States to either allow the building of a gas pipeline from Iran or assist in paying the expected $18 billion penalty if the project is not completed by March 2024. The pipeline, already completed on the Iranian side, would provide Pakistan with 750 million cubic feet of gas daily once completed. Pakistan and Iran signed the pipeline agreement in 2014, which included penalties for abandoning the project.