Sources have informed The News that Pakistan State Oil (PSO) and the State Bank of Pakistan (SBP) are collaborating on establishing banking channel arrangements for the import of crude oil from Russia.
According to sources, the government aims to commence the import of crude oil from Russia by the end of April. State Minister for Petroleum, Dr. Musadik Malik, had previously announced that the supply of crude oil from Russia would begin by the end of this month. However, the sources suggest that the import may face some delays and could potentially arrive by mid-May if the process proceeds without any hiccups.
Insiders familiar with the situation regarding the supply of Russian crude oil to Pakistan have revealed that a contract between the two parties could be signed by mid or the third week of April. The sources emphasized that finalizing the banking channel arrangements was necessary before the contract could be signed, and both PSO and SBP were working towards making progress in this regard.
The sources further highlighted that determining the currency for payment was a crucial part of the banking channel arrangements. The Russian side has requested payment in one of three currencies, namely the US dollar, UAE Dirham, or Chinese Yuan. However, the decision on which currency to use has yet to be made.
The sources also mentioned that it was uncertain whether the price of Russian oil to be imported by Pakistan would adhere to the cap set by G-7 countries for buying Russian oil. The price is still being negotiated and no conclusion has been reached yet.
Last month, The News reported that the government was attempting to procure Russian crude oil at $50 per barrel, which is $10 less than the cap imposed by G-7 countries on the purchase of Russian crude oil. However, the sources stated that if the crude oil was procured in accordance with the G-7 cap, the freight cost and insurance premium cost would increase the price of Russian crude oil to a level similar to the price of the crude oil purchased by Pakistan from other countries.
The possibility of buying Russian crude oil was first discussed in February of last year when the former Prime Minister of Pakistan, Imran Khan, visited Russia. After his departure from office in April, the new government also expressed interest in pursuing this opportunity. In November of last year, a high-powered delegation visited Russia to discuss the details of the oil supply, and a Russian delegation followed up with a visit to Pakistan in January 2023 to work out the modalities of the deal.