Pakistan has been battling a balance of payment crisis with foreign exchange reserves falling to $4.6 billion, barely enough to cover three weeks of imports – mostly for oil.
Pakistan officials and Russian Energy Minister Nikolay Shulginov, who is in Islamabad for an annual inter-governmental commission on trade and economy, did not specify the size of the planned purchases.
“We have agreed that the payments will be made in the currencies of friendly countries,” Shulginov said at a joint news conference with Pakistan’s Economic Affairs Minister Ayaz Sadiq, without elaborating.
He said the two sides have drafted an agreement to sort out issues like transportation, insurance, payments and loadings, adding: “We have already established a timeline of this agreement in our joint statement which is late March.”
Russia calls “unfriendly” countries, especially the United States and from the European Union, which imposed sanctions against it following Moscow’s invasion of Ukraine last year.
Energy purchases account for most of Pakistan’s import bill.
Shulginov said Russian gas companies might not be in a position at present to extend any supplies to Pakistan.
“We have decided that it would be a good idea for Pakistan to approach Gazprom and Novatek, two largest LNG producing companies in late 2023 to discuss the conditions when they have spare capacities,” he said.
Historically Pakistan has had no major commercial relations with Moscow, unlike neighbouring India, and as a traditional U.S. ally, it had also been hesitant to do trade or any business with Moscow in the past.
It depends on oil from Gulf countries which often extend facilities like deferred payments and because imports from there are cheaper logistically given proximity to the Strait of Hormuz.
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