Pakistan and Russia are engaging in discussions regarding a potential cooperation agreement in the oil sector. Pakistani Finance Minister Muhammad Aurangzeb confirmed this development in a statement to the Russian news agency RIA on November 14, 2023. He emphasized that Russia possesses strengths in exploration, production, and refining, expressing optimism about reaching an agreement that would benefit both nations.
Earlier this year, Russia’s Energy Minister Sergei Tsivilev indicated that Russian firms might participate in upgrading a refinery in Pakistan. This potential collaboration reflects a deepening energy relationship between the two countries. As Russia seeks alternative markets for its oil, which is currently banned in Western nations, cash-strapped Pakistan is looking for more affordable crude supplies and opportunities to develop its own oil, gas, and minerals industry.
In 2023, Pakistan began importing Russian crude, paying for these shipments in Chinese yuan. This shift marks a significant step in the evolving energy ties between the two nations. Pakistani Petroleum Minister Ali Pervaiz Malik has actively engaged with Russian entities, including Gazprom, during an energy forum in Russia in October. His discussions followed a meeting between Pakistani Prime Minister Shehbaz Sharif and Russian President Vladimir Putin in Beijing, where they reaffirmed their commitment to enhancing energy and trade cooperation.
Recent Developments in Energy Collaboration
During his visit to the St Petersburg International Gas Forum in October, Malik explored investment opportunities for Russia in Pakistan’s minerals and energy sectors. These conversations included potential technology transfers and digital solutions aimed at increasing efficiency in exploration and production.
The countries held a high-level meeting at the end of November, focusing specifically on cooperation in the oil and gas sectors, alongside opportunities in liquefied natural gas (LNG) and liquefied petroleum gas (LPG) supply. Meanwhile, Pakistan is advancing plans to boost its exploration efforts. Earlier this month, the government signed five agreements for oil and gas exploration with local private and state-owned companies, targeting three offshore and two onshore blocks.
The Pakistani government also conducted an auction for 40 offshore blocks last month, receiving 23 bids from four consortia, which included local energy firms and Turkey’s state-owned energy major TPAO. This increased activity in the oil and gas sector signifies Pakistan’s strategic efforts to enhance its energy independence and leverage international partnerships.
As Pakistan and Russia continue to negotiate this cooperation deal, the outcomes could reshape the energy landscape for both nations, opening new avenues for collaboration and resource sharing. The commitment to strengthen ties in the oil sector is expected to yield significant benefits, particularly for Pakistan, as it seeks to bolster its energy security amid ongoing economic challenges.
