ISLAMABAD: Pakistan and Russia are on the verge of concluding acomprehensive oil-sector agreement, marking a significant milestone inbilateral energy cooperation. Finance Minister Muhammad Aurangzeb recentlyconfirmed that discussions between the energy ministries of both nationsare progressing positively, focusing on exploration, production, refining,and potential long-term supply arrangements. This development comes asPakistan seeks to diversify its energy sources and reduce import costs,while Russia looks for new markets following Western sanctions.
The potential deal encompasses wider collaboration beyond mere crudeimports. It includes joint ventures in offshore oil and gas exploration,upgrading existing refineries in Pakistan with Russian expertise, andtechnical assistance in enhancing recovery from mature fields. RussianEnergy Minister Sergei Tsivilev earlier indicated interest in refinerymodernisation projects involving Russian companies, underscoring thestrategic depth of these negotiations.
Pakistan began importing discounted Russian crude in 2023, with the firstgovernment-to-government cargo arriving in Karachi that year. Althoughvolumes remained limited due to refining constraints and paymentchallenges, the initiative helped Islamabad navigate itsbalance-of-payments crisis. Current talks aim to establish a morestructured framework, potentially including stable supply volumes andinvestment in downstream infrastructure to optimise Russian Urals crudeprocessing.
Economic imperatives drive both sides towards this agreement. Pakistan’sannual oil import bill exceeds several billion dollars, straining foreignreserves amid persistent economic pressures. Access to Russian expertise inexploration and production could boost domestic output, particularly inrecently auctioned offshore blocks where international interest has beentepid. For Russia, Pakistan represents a growing South Asian market amidredirected exports from Europe.
Recent high-level engagements have laid the groundwork for this progress.In November 2025, the 10th Pakistan-Russia Intergovernmental Commission inIslamabad concluded with protocols emphasising oil and gas sectoropportunities, alongside LNG and LPG supply frameworks. Prime MinisterShehbaz Sharif’s earlier meetings with President Vladimir Putin reaffirmedcommitments to expand energy and trade ties.
The proposed agreement could also extend to industrial cooperation.Discussions include the possibility of establishing a new steel plant inPakistan, leveraging Russian technological strengths. Such diversificationaligns with Islamabad’s efforts to attract foreign investment in heavyindustry and minerals, building on existing frameworks like the PakistanMining Policy.
Geopolitical dynamics further contextualise these talks. Western sanctionson Russian energy have prompted Moscow to pivot towards Asia, with Indiaand China already major buyers of discounted crude. Pakistan’sparticipation, though modest so far, signals a pragmatic approach to energysecurity without aligning fully with any bloc, maintaining balances withtraditional Gulf suppliers.
Challenges remain in finalising the deal, including logistics, insurancemechanisms, and payment currencies. Past imports utilised Chinese yuan,reflecting efforts to bypass dollar-dominated transactions. Technicalassessments of refinery compatibility with heavier Russian grades will becrucial, as initial shipments required blending with lighter Arabian crude.
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If concluded, this strategic oil agreement would enhance Pakistan’s energyresilience and foster deeper economic interdependence with Russia. Analystsanticipate positive impacts on bilateral trade, currently skewed towardsRussian exports, and potential spillover into connectivity projects linkingCentral Asia through Pakistan.
The evolving partnership reflects broader shifts in global energy markets,where discounted Russian supplies offer relief to import-dependenteconomies like Pakistan’s. Sustained dialogue at ministerial levelssuggests momentum towards formalisation in the coming months, potentiallyreshaping South Asia’s energy landscape.
Source: https://www.dawn.com/news/1961445
Tags: Pakistan, Russia, Oil Deal, Energy Cooperation, Muhammad Aurangzeb,Sergei Tsivilev
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