Russia Reportedly Agrees to Supply Pakistan With Oil, Gas & Wheat

Russia has agreed to provide Pakistan with crude oil and wheat at a discounted rate in order to meet the South Asian country's rising energy and food demands. The decision was announced just days after a Pakistani delegation visited Moscow last week to negotiate with Russian authorities; however, the details of the deal have yet to be disclosed.

On Monday, State Minister for Petroleum Musadik Malik announced that Pakistan would buy crude oil, gasoline and diesel from Russia at discounted rates; however, the exact rate will be announced at a later stage, after the Russian delegation's visit to Islamabad for talks on January 23, 2023.

Following the devastating floods over the summer and amid ongoing political instability, Pakistan has been struggling with increasing energy requirements, mainly with respect to oil and gas.

According to a source in the petroleum ministry, "Russia has confirmed the availability of 100,000 barrels per day of crude oil supply but has not confirmed the rate yet which will be discussed in January," newspaper The Express Tribune reported.

Earlier, petroleum minister Musadik Malik told a news conference in Islamabad that negotiations with Russia had been very positive, as the government was determined to fix the issues it is currently facing in the energy sector. Malik also stated that talks were held with Russian companies regarding the liquefied natural gas (LNG) sector.

According to the minister, Pakistan had been invited to begin contracts for 2025-26. "Now there will be government-to-government talks. Besides the private sector, the Pakistani side also discussed Russia’s public sector firms for LNG imports."

Overall the minister described the visit to Russia as "very important" because "the government wants Pakistan to be self-sufficient in every sector."

"No factories should be closed. Every child should have a job. We have to fulfill this vision of the Prime Minister Shahbaz Sharif. We require energy to feed the economy, we need energy for development and now we are taking steps to increase energy supplies," Malik was reported as saying.

Long Time Coming

The purchase of oil and gas from Russia has been a focal point of Pakistan's politics for a long time now, particularly after the visit of former Prime Minister Imran Khan, only a day before Russia launched its special operation in Ukraine on February 24. Khan, who was in Moscow when the operation started, was the first prime minister of Pakistan to visit Russia in 23 years.

Some analysts described the meeting as a clear sign that Pakistan and Russia matter to each other strategically.

There was a long list of topics that were discussed, including: mutual concerns in Taliban-controlled Afghanistan, regional security cooperation, counterterrorism operations and perhaps most important - the Pakistan Stream Gas Pipeline between Karachi and the city of Kasur in Punjab.

The pipeline project is estimated to be worth more than $2 bn and it is widely believed to help fix Pakistan’s ever-increasing energy demands. It will be over 650 miles long once completed, and it promises to provide thousands of jobs to locals.

Pakistan is counting on the practical implementation of the intergovernmental agreement on the construction of the gas pipeline as it will have a capacity of 12.4 billion cubic meters of gas per year. Currently, Pakistan faces a severe gas shortage and millions of households across the country are suffering.

The gas deal was signed between Russia and Pakistan in October 2015.

However, the high-profile visit resulted in Imran Khan being ousted from power through a no-confidence move in parliament last April. He claimed that his Moscow visit was one of the reasons behind his ouster, and he blamed the Western powers for his removal from power.

So far, Khan and his PTI party leaders have been holding nationwide peace protests demanding that the government announce snap elections.

Nevertheless, in terms of foreign policy, it seems that the current government of Shahbaz Sharif is following in the footsteps of his predecessor, as it realizes how vital Russia and its resources are for the world, and no amount of sanctions imposed by Western countries can change that fact.

According to analyst Raja Mohan, "The one big element missing from the South Asian chessboard was for Pakistan to develop its relations with Russia."

Beginning of Something Good

Back in September, Vladimir Putin and Shahbaz Sharif held important meetings in Uzbekistan on the sidelines of the Shanghai Cooperation Organisation (SCO) summit. During these talks, the two leaders discussed matters related to oil, gas and wheat supplies to Pakistan from Russia.

President Putin also expressed solidarity and support for the flood-hit population in Pakistan after the devastating calamity which left 1,500 people dead and 30 million displaced.

The first humanitarian assistance flight from Russia to aid the flood-affected people arrived in Pakistan in September and it was received by Russian Consul General in Karachi, Fedorov Andrey, Advisor to Chief Minister on Relief and Rehabilitation Rasool Bux Chandio, and representatives of NDMA and the Ministry of Foreign Affairs.

"35 tons of aid from the state reserve have been sent to the residents of Pakistan. Food, tents, water purification equipment are being delivered to the regions of the country affected by the three—month monsoon rains," the press service of the Federal Reserve was reported as saying.

During the SCO summit, Shahbaz Sharif reaffirmed Pakistan’s commitment to work closely with Russia, in order to increase and reinforce cooperation across all areas, including food security, trade and investment, energy, defense, and security.

The prime minister also stressed that Russia and Pakistan both had high stakes in a peaceful Afghanistan, hence, both are committed to supporting all regional and international efforts to stabilize the neighboring country.

Just two days ago, Pakistan's Finance Minister, Ishaq Dar, told reporters in Islamabad that the country's Economic Coordination Council has approved the import of 450,000 tons of wheat from Russia on a government-to-government basis to be effective in February-March next year.

Hence, both Russia and Pakistan are committed to the existing agreements and will work together to fulfill them in the coming months.