Pakistan has taken a big step in its energy security by signing an agreement with Russia for the import of cheap crude oil. This deal is expected to provide Pakistan with much-needed relief from expensive energy imports from the Middle East and give it a new source of cheaper energy. The agreement was signed by officials from the Pakistani Ministry of Petroleum and Natural Resources and the Russian Energy Ministry in Moscow on April 8, 2021. The two countries have agreed to an initial purchase of 10 million barrels of crude oil, with more shipments planned in the near future. This represents a major development in Pakistan's strategy to reduce its dependence on expensive imported oil and secure its long-term energy needs. In this article, we will explore some of the implications and details of this important deal between Pakistan and Russia.

Pakistan's current oil situation

Pakistan is currently in the process of importing oil from Russia. The oil is expected to be much cheaper than what Pakistan has been paying for oil in the past. This is a positive development for Pakistan, as it will help to reduce the country's overall costs.

The deal with Russia

Pakistan is set to import oil from Russia at a price far below the international benchmark, in a move that could help Islamabad shore up its finances and deepen ties with Moscow.

The deal, which is still being finalised, will see Pakistan buying Russian oil at around $73 per barrel, compared to the current market price of around $85. Pakistan will also get a $500 million loan from Russia to build an oil refinery.

This is a major coup for Pakistan, which has been struggling to find affordable sources of oil. The country currently imports around 80% of its oil needs, and the high cost of energy has been a major drag on the economy.

The Russian oil will be delivered via the existing pipeline network from Kazakhstan, and it is expected to start flowing later this year. This is likely to further increase Pakistan's dependence on Russian energy supplies.

How this will affect Pakistan's economy

Pakistan is one of the world’s largest importers of crude oil, with imports totaling $16.4 billion in 2016. In an effort to reduce its dependence on imported oil, Pakistan has been seeking to import cheaper Russian oil.

The move could potentially save Pakistan billions of dollars each year, as Russian oil is currently about $10 per barrel cheaper than the Brent crude benchmark that Pakistan uses to price its imports. While the savings would be welcomed by Pakistan’s government, it is unclear how much of a benefit the country’s economy would actually see from lower oil prices.

One reason for this is that Pakistan’s economy is highly import-dependent, and lower oil prices could lead to a decrease in demand for Pakistani goods and services abroad. Additionally, lower oil prices could lead to higher inflation in Pakistan, as energy costs make up a significant portion of the country’s consumer price index.

Still, the potential savings from importing cheaper Russian oil are significant, and Pakistan’s government will likely continue to pursue this option in an effort to reduce the country’s trade deficit and improve its overall economic performance.

Other countries import from Russia

Other countries import from Russia

In addition to Pakistan, other countries also import oil from Russia. These include China, India, and South Korea. All of these countries have been able to secure long-term contracts with Russian oil companies. This has allowed them to lock in low rates for oil imports. As a result, they have been able to save money on their energy costs.

What this means for the future of Pakistan

This is good news for Pakistan, which has been struggling to import oil at a reasonable price. The country has been forced to rely on more expensive imports from Saudi Arabia and other countries in the Middle East.

The deal with Russia will allow Pakistan to import oil at a much lower price, which will help to ease the country's financial problems. It is also likely to improve relations between Pakistan and Russia, which have been strained in recent years.

The agreement between Pakistan and Russia is also likely to have a positive impact on the Pakistani economy. The lower cost of oil imports will help to reduce inflation and improve the country's balance of payments.