State Minister for Petroleum Musadik Malik has confirmed that Pakistan paid for its first government-to-government import of Russian crude using Chinese yuan, marking a significant change from the country’s prior export payment strategy favoring the US dollar.
Russian crude paid in Chinese currency: Islamabad and Moscow reached a new agreement, scheduling the first shipment of discounted Russian crude oil to arrive in Karachi on Sunday. Currently, the port is discharging the shipment.
In a conversation with a news organization, Malik chose not to disclose the financial specifics of the deal, such as the cost or the discount obtained by Pakistan. However, he did confirm that Pakistan made the payment in Chinese currency.
According to him, the first government-to-government (G2G) contract between Pakistan and Russia involved the purchase of 100,000 tonnes, of which 45,000 tonnes had already arrived at Karachi Port, and the remaining was on its way. The transaction took place back in April.
The purchase by Pakistan provides Moscow with a new market to complement its supplies to India and China, as it diverts oil from Western markets due to the war in Ukraine.
Even though Pakistan has historically been a Western friend, observers claim that the simple transaction also gives Pakistan a new path forward when its financial requirements are pressing.
Pakistan’s Refinery Limited (PRL) Refines Russian Crude, Aiming to Reduce Reliance on Middle Eastern Oil
According to the ministry, the Russian crude would initially be refined by Pakistan’s Refinery Limited (PRL). He had originally described the shipment’s purchase as a test run to determine its technical and financial viability.
Monday, Malik downplayed worries about the country’s previous purchase of Middle Eastern petroleum products as well as worries about the ability of local refineries to process Russian oil.
The refining of this oil won’t ever result in a loss, according to iterations of several product mixtures that Malik and his team have tested, and they are confident it will be profitable.
The minister informed a foreign news outlet that the refinery requires no adjustments to refine the Russian crude.
The majority of Pakistan’s external payments come from energy imports. According to statistics from analytics company Kpler, Islamabad bought 154,000 bpd of oil in 2022, roughly maintaining the same level as the previous year.
Saudi Arabia, the biggest exporter in the world, and the United Arab Emirates were the main suppliers of crude. The 100,000 bpd from Russia should significantly reduce Pakistan’s reliance on gasoline from the Middle East.