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Pakistani government plans to use yuan to buy Russian oil
Seetao 2023-05-08 16:16
  • Pakistan Refinery Limited will be the first refinery to refine Russian crude, other refineries will join after trial runs
  • Pakistan is facing a balance of payments crisis and extremely low foreign exchange reserves
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Pakistan is likely to use yuan to pay for crude imports from Russia, with the first 750,000 barrels expected to arrive in the country as early as June. The deal will be backed by Bank of China.

The source did not provide details on the method of payment or the exact discounts Pakistan would receive, saying it would not be in the interest of buyers and sellers to make such information public. Pakistan has agreed to pay between $50 and $52 a barrel for crude oil, while the G7 caps prices for Russian oil at $60 a barrel.

In December 2022, the European Union, the G7 and their allies imposed a block ban on Russian seaborne oil exports and set a price cap of $60 per barrel. In January 2023, Moscow and Islamabad reached a conceptual agreement on the supply of Russian oil and oil products to Pakistan. The deal is expected to help cash-strapped Pakistan. Pakistan is facing a balance of payments crisis and extremely low foreign exchange reserves.

Russian Foreign Ministry spokeswoman Zakharova said at the end of March that Russian and Pakistani companies are studying the supply of crude oil to Pakistan, have initially agreed on the price, and are discussing the issue of trial supply of a batch of crude oil. The supply may increase in the future, and we hope to resolve all technical issues in the near future and establish a stable export.

Pakistani Oil Minister Musadiq Malik said in April that under a new agreement between Pakistan and Russia, Pakistan had placed its first discounted crude oil order with Russia; according to the agreement, Pakistan will only buy discounted crude oil, not Refined fuel.

Earlier, Argentina announced that it would stop using U.S. dollars to pay for goods imported from China. Other countries such as Russia, Brazil, France and the Association of Southeast Asian Nations have also decided to use the yuan or their own currencies instead of the dollar.

Indian government officials and people familiar with the matter said that India and Russia have suspended negotiations on the use of Indian rupees for settlement. It means that India's intention to import oil and coal from Russia at a lower cost has suffered a setback. It is reported that the two sides are currently looking for alternatives. One of the Indian officials said Russia was unwilling to hold rupees and wanted to pay in other currencies, including yuan.Editor/XingWentao

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