September 5, 2023
Pakistan Technology

Russia and Pakistan Strike Deal to Revolutionize Energy Sector: Will it Change the Game for Both Countries?

Russia and Pakistan Strike Deal to Revolutionize Energy Sector: Will it Change the Game for Both Countries?

Russia and Pakistan have agreed to enhance cooperation in the hydroelectricity sector during the eighth meeting of the Inter-Governmental Commission (IGC) held in Islamabad. The talks focused on identifying potential new avenues for strengthening bilateral ties.

Russia and Pakistan also discussed ways of supplying oil and gas to Pakistan on a long-term basis during a series of meetings between Russian and Pakistani energy ministers and other government officials in Islamabad. A Russian delegation led by Energy Minister Nikolay Shulginov is currently visiting Islamabad to discuss ways of improving bilateral economic and trade relations, with the focus mainly on the provision of oil and gas to Pakistan at discounted rates.

In addition to the energy sector, Russia and Pakistan also discussed ways to advance mutually beneficial cooperation in areas such as trade and investment, agriculture, industry, education, science and technology, information and communication technologies, finance, customs, and communication.

Russia has also agreed to help Pakistan find alternative sources of energy and will cooperate with them to explore gas in the country. Both countries have also agreed to deal in local currency and have plans to sign an agreement between their customs to stop smuggling of commodities.

Pakistan and Russia signed two agreements in 2015 and 2021 for the construction of the $2.5 billion Pakistan Stream Gas Pipeline Project stretching from the port city of Karachi to northeastern Punjab province. The pipeline was slated to begin last year, but it could not be started due to global sanctions on Moscow.

Pakistan has been grappling with increasing energy requirements, mainly oil and gas, together with an inflating current account deficit because of oil payments. In December, Pakistan’s Minister of State for Petroleum Musadik Malik claimed that Russia had agreed to provide oil to Pakistan at discounted rates to meet Islamabad’s rising domestic and industrial energy demands.

The procurement of oil has long been a center of local politics, particularly after the visit of former Prime Minister Imran Khan only a day before Russia launched its war on Ukraine on Feb. 24, 2022. Khan, ousted through a no-confidence vote in parliament in April, claimed that his Moscow visit was one of the reasons behind his ouster.

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