Minister heads to Russia for oil and gas talks

Islamabad seeks fuel import deal with Moscow on terms similar to those agreed by New Delhi

ISLAMABAD:

State Minister for Petroleum Dr Musadik Malik and the petroleum secretary have flown to Russia for talks on issues including oil and gas supplies, two people close to the matter told Reuters on condition of anonymity.

The trip comes as the South Asian nation struggles to meet domestic gas supply needs as winter approaches while battling to contain a current account deficit swelled by energy payments, mostly for oil.

The state minister did not immediately respond to a request for comment on Monday.

The sources provided no further details, such as the exact agenda, who the officials would meet in Russia or when the talks will take place.

On Thursday, The Express Tribune reported that a “breakthrough” between Pakistan and Russia on the projects agreed between the two countries in the energy sector is expected in December.

Read more: Minister seeks firms’ input on energy deals with Russia

The report stated that way has been paved for the import of petroleum products, crude oil and gas from Russia, as refineries in Pakistan have expressed their willingness to produce yields from the Russian crude oil.

During the Shanghai Cooperation Organisation summit in Uzbekistan in September, Prime Minister Shehbaz Sharif was told by Russian President Vladimir Putin that pipeline gas supplies to Pakistan were possible since part of the infrastructure was already in place.

In the meeting, PM Shehbaz said that Pakistan was committed to expanding cooperation with Russia across all areas of mutual benefit including food security, trade and investment, energy, defence and security.

According to sources, Pakistan will save more than $2 billion annually in case of the implementation of energy projects with Russia whereas buying petroleum products from Moscow would ease pressure on the foreign exchange reserves.

Also read: US can’t stop Pakistan from buying Russian oil: Dar

Earlier this month, Finance Minister Ishaq Dar had indicated that Pakistan overcame the United States’ opposition to the purchase of Russian oil and stressed that Islamabad intended to enter into the fuel import deal with Moscow on terms similar to those agreed by New Delhi.

The country’s financial czar while addressing the PML-N workers in Dubai, said that the US had been told that Pakistan could purchase Russian oil because its neighbour India was doing the same.

In October, Pakistan's Ambassador to Moscow Shafqat Ali Khan had revealed that Islamabad was also seeking liquefied natural gas (LNG) supplies from Moscow.

While speaking to the Russian news agency TASS, the diplomat said the two countries were currently in talks over the matter and pipeline gas supplies could be the solution to Pakistan’s rapidly-increasing energy shortage.

That being said, due to the lack of necessary infrastructure for pipeline gas supplies, Pakistan is currently focusing on its “immediate needs” related to LNG.

"We have established contact with the Russian side, and we are, of course, very much interested in the procurement of LNG. But that will come later. Our immediate need is for LNG,” he said.

He added that an agreement on LNG supplies has yet to be reached with Russia. "We have just established contact on this."

Due to the surge in global LNG prices, Pakistan’s energy security troubles have been fuelled drastically, which in turn has heightened the economic woes for the country.

Pakistan also currently has no long-term LNG supplier with spare supply in the market also fast diminishing owing to the increase in demand from the European Union.

With dwindling local gas reserves, the country has begun to ration supplies to residential and commercial consumers. Local media has also reported that oil supplies remain tenuous owing to difficulties in paying for imports.