Russia offers Pakistan long term gas shipment

Deputy PM says it is in talks to up supplies to Azerbaijan, Uzbekistan, Kazakhstan

Reuters December 26, 2022
Model of natural gas pipeline, EU and Russia flags, July 18, 2022. Photo: REUTERS/Dado Ruvic/Illustration

Russian Deputy Prime Minister Alexander Novak told state TASS news agency that in the long-term, Russia can send its natural gas to the markets of Afghanistan and Pakistan, either using the infrastructure of Central Asia, or in a swap from the territory of Iran.

Earlier this month, State Minister for Petroleum Musadik Malik had stated that Russia would sell crude oil to Pakistan at a discounted price, days after he led a government team to Moscow to negotiate the deal.

Russia would also supply discounted petrol and diesel to Pakistan, Musaddiq Malik had told a news conference in Islamabad.

He did not specify the price of the discounted Russian oil or say whether the imports would comply with a $60 per barrel cap imposed by the G7 nations and the EU on Russian seaborne oil from this week over Russia's invasion of Ukraine.

Pakistan has been unable to procure LNG from the international market because spot prices remain out of its range and shipments under long-term deals remain insufficient to match rising demand.

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.

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Oil and energy make up the largest portion of Pakistan's imports bill. Moscow and Islamabad have also long been working on a gas pipeline project with little success.

In a wide-ranging interview with the TASS agency, parts of which have been published throughout the weekend, Novak also said that Russia has agreed with Azerbaijan to increase gas supplies for its domestic consumption. "In the future, when they increase gas production, we will be able to discuss swaps," he said. Moscow is also discussing higher supplies of its gas to Kazakhstan and Uzbekistan, he said.

The deputy prime minister also said that Moscow was ready to resume gas supplies to Europe through the Yamal-Europe Pipeline.

"The European market remains relevant, as the gas shortage persists, and we have every opportunity to resume supplies," TASS cited Novak as saying in remarks published by the agency on Sunday. "For example, the Yamal-Europe Pipeline, which was stopped for political reasons, remains unused."

The Yamal-Europe Pipeline usually flows westward, but has been mostly reversed since December of 2021 as Poland turned away from buying from Russia in favour of drawing on stored gas in Germany.

In May, Warsaw terminated its agreement with Russia, after earlier rejecting Moscow's demand that it pays in roubles. Russian supplier Gazprom responded by cutting off supply and also said it would no longer be able to export gas via Poland after Moscow imposed sanctions against the firm that owns the Polish section of the Yamal-Europe pipeline.

Novak also reiterated that Moscow is discussing additional gas supplies through Turkey after a creation of a hub there. He also said that Moscow expects it will have shipped 21 billion cubic metres (bcm) of liquefied natural gas (LNG) to Europe in 2022.

"This year we were able to significantly increase LNG supplies to Europe," Novak said. "In the 11 months of 2022 they increased to 19.4 bcm, by the end of the year 21 bcm are expected."


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