Pakistan is set to hold bilateral talks with a Russian Delegation, arriving tomorrow, on oil and liquefied natural gas (LNG) trade deal for a long-term basis and the much-touted flagship $3 billion Pakistan Stream Gas Pipeline (PSGP) project.
The delegation, which comprises 80 people, will land in Pakistan on January 17 for three days of bilateral discussions through the Inter-Governmental Commission forum (IGC).
“The Pakistani side will be headed by Federal Minister Sardar Ayaz Sadiq for the IGC talks. For the import of Russian oil and LNG on a GtG basis, both countries need to first negotiate the IGA (inter-governmental agreement) as had been finalized and inked in the case of the Pakistan Stream Gas Pipeline Project (PSGP), which was earlier called the North-South Gas pipeline project,” they said.
The ownership and cooperation agreement for PSGP was still in written format on February 24, 2022, when former prime minister Imran Khan went to Moscow. Both parties wanted to sign the PSGP agreement during the Imran and Putin meeting, but it was not able to be done because the experts from both sides could not agree on several terms of the shareholding agreement.
Currently, the G7 countries have limited the price of Russian crude oil to $60 per barrel and forbade the use of Russian ships to carry oil. In exchange, Moscow promised to stop selling oil to countries that agree to a Western price limit on its petroleum.
The Pakistani side needs to talk about the shipping costs, the premium by the shipping trader, the insurance coverage, and the payment options.
Agriculture, energy, customs, industry, education, research and technology, information and communication technologies, communication, roads and postal service, railroads, and finance are all included in the IGC’s agenda as areas for cooperation in trade and investments. Additionally, Pakistan’s debt to Russia will be settled and discussed.
Both sides will also discuss prospects of cooperation in the field of electric power, hydropower, renewable energy sources, oil, and gas production.
Discounted crude oil
Musadik Malik, the minister of state for petroleum, announced on December 5, 2022, that Russia had agreed to offer Pakistan reduced crude oil as well as gasoline and diesel.
“Our visit to Russia turned out to be more productive than expected,” Malik said. He added that Russia did not have LNG. “Talks with Russia private firms are underway for the import of LNG, while we have also engaged Russia’s state LNG producers,” Malik said.
The state minister said that great progress had been made in negotiations with Moscow regarding the pipeline projects.
Pakistan had requested a 30–40% discount on Russian crude oil during its visit to Russia, but the Russians refused to make any concession at the time because all volumes had already been purchased.
Moscow demanded that Pakistan first fulfill its commitment to the Pakistan Stream Gas Pipeline (PSGP), the main project, which will be built from Karachi to Lahore, Punjab.
The Pakistani team’s answer included a revision in the PSGP project’s model. The Russian side claimed that, with the exception of a few shareholding agreement elements, the project’s GtG (government-to-government) model had already been decided upon.
