Islamabad, Pakistan – Pakistan has received its first shipment of Russian crude oil under an agreement signed between the two countries in April, but experts believe it will be too soon to say if the deal will provide significant benefit to domestic consumers.
The cargo carrying 45,000 metric tonnes of crude oil arrived at the southern city of Karachi on Sunday while another 50,000 metric tonnes is expected to arrive later this week, according to the Pakistan Refinery Limited (PRL), where the crude oil will be processed.
Prime Minister Shehbaz Sharif called the arrival of the Russian crude a “transformative day” for the crisis-ridden country.
“I have fulfilled another of my promises to the nation,” he tweeted. “This is the first-ever Russian oil cargo to Pakistan and the beginning of a new relationship between Pakistan and [the] Russian Federation.”
Russia has been slapped with sanctions from the Western powers after it invaded Ukraine last year, cutting its oil and gas exports to the European Union and the United States. The Pakistan deal gives Moscow a new oil market after India and China as the Ukraine conflict rages on.
Musadik Malik, Pakistan’s junior minister for petroleum, told a private news channel on Monday that petrol prices in the country will fall once the supply from Russia starts on a regular basis.
“If we start getting one-third of our crude oil from Russia, then there will be a big difference in prices and its effect will reach people’s pockets,” he said.
Pakistan, the world’s fifth most populous country, is reeling under a severe economic crisis, resulting in a shortage of foreign currency to pay for fuel imports.
The oil shipment comes at a time when the country has less than $4bn in foreign reserves, enough to cover less than four weeks of import. Islamabad is also waiting to receive a $1.1bn bailout package from the International Monetary Fund (IMF) as part of a $6.5bn loan programme expiring this month.
Al Jazeera reached out to Malik to ask about how the payment for the Russian oil was done, but he did not respond to the queries.
Farhan Mahmood, an energy sector analyst, told Al Jazeera that Pakistan imports nearly 80 percent of its domestic petroleum requirement, racking up an import bill of $13bn in 2022-23. But he forecast a fall in demand for the next financial year.
“Looking at the gradual decline we are seeing in petroleum usage, we forecast that the import bill may reduce to $10bn,” he said. “This import is part of a pilot project but to expect it will immediately make a difference is wrong.”