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ISLAMABAD: Pakistan and Russia have decided to draft an agreement on crude oil and oil products supply by late March 2023 to sort out all issues with regard to transportation, insurance, and payment.

This was stated by Nikolay Shulginov, Minister of Energy for the Russian Federation while responding to media queries during a joint briefing with Ayaz Sadiq, Federal Minister for Economic Affairs of Pakistan at the conclusion of the eighth session of the Pakistan-Russia Inter-Governmental Commission on Trade, Economic, Scientific and Technical Cooperation (IGC) held on January 18-20, 2023 in Islamabad.

Both sides signed agreements regarding cooperation and mutual assistance in Customs matters, protocol on the exchange of documents and data on the Customs value of goods transported and the working agreement on the airworthiness of aeronautical products.

Discounted crude, refined products: Pakistan-Russia IGC to meet in Jan

The Russian minister further said that Pakistan will pay for energy purchases from Russia, when they start in late March, in currencies of friendly countries.

“On crude oil and future supply of oil products we already have decided to draft an agreement to sort out all issues with regard to transportation, insurance, payment and have already decided a timeline of this agreement as stated late March,” said Shulginov, adding that as for the LNG supply, Russia is committed to long-term contracts and the spot market capacity is very small but nevertheless we decided that it would be a good idea for Pakistan to approach the two largest producing companies in late 2023 to discuss the conditions.

He further said that as for the oil supply and oil product and they are now in the final stage of the agreement. “With our Pakistani colleagues we held negotiations and discussed financial and banking cooperation and have agreed that the payments would be made in the friendly countries’ currencies.

Ayaz Sadiq, while responding to a question, said that gas project is under discussion and Pakistan energy minister has proposed a holistic approach to it starting from the supply of gas till the pipeline, till the distribution and end consumer also.

Both the ministers read out a joint statement which is as given: “According to the joint statement of the 8th Session of the Pakistan-Russia Inter-Governmental Commission on Trade, Economic, Scientific and Technical Cooperation, Pakistan and Russia have mutually agreed to finalize the transaction structure for trade in the oil and gas sector by March 2023. This was agreed to at the Eighth Session of the Pakistan-Russia Inter-Governmental Commission on Trade, Economic, Scientific, and Technical Cooperation (IGC) held on January 18-20, 2023 in Islamabad.

Working under the express guidance of Prime Minister Shahbaz Sharif and Russian President Vladimir Putin, both sides took the opportunity to reaffirm their commitment to a strong and comprehensive economic relationship.

Both sides agreed that after consensus on the technical specifications achieved, the oil and gas trade transaction will be structured in a way it has a mutual economic benefit for both countries. The process is to be completed by March 2023.

Both sides proceeded from the discussions and decisions of the seventh IGC and carried the process forward, as well as, explored additional avenues of cooperation. Both sides agreed to further strengthen and enhance collaboration in the fields of trade and investment, energy, communication and transport, higher education, industry, railways, finance and banking sector, customs, agriculture, science and technology, and information technology. Both sides observed and noted positive prospects for implementable and concrete projects in the above-mentioned sectors of the economy with a huge potential for the socioeconomic development of both countries.

The Commission agreed that the relevant ministries and departments from both sides will vigorously follow up to exploit this potential for common prosperity. Participants also agreed to strengthen energy cooperation, enhance energy trade and broaden energy infrastructure investment based on strategic and favourable commercial terms. Both sides have agreed to work on a “Comprehensive Plan for Energy Cooperation”, which would form the foundation for future work and is to be finalized in 2023.

It was mutually agreed upon that the Pakistan Stream Gas Pipeline Project should be considered in terms of a comprehensive infrastructure that is economically viable for sustainable gas infrastructure development ensuring affordable gas supplies.

The Russian side was invited toward potential projects of the federal and provincial governments of Pakistan, including in PPP mode, and requested the Russian businessmen to explore these possibilities. Both sides have resolved the pending issues related to the exchange of information on certificates of origin of goods with the use of an electronic verification system and shall endeavour to finalize the above-mentioned protocols by the end of May 2023.

The sides agreed to nominate focal persons from both sides in order to enhance mutual cooperation and discuss issues concerning connectivity and logistics in Central and South Asia. The sides also agreed to take necessary measures to increase bilateral cooperation in science, technology, and higher education especially academic linkages, collaborative and impactful research, training and development and learning, and enhanced interest of Pakistani citizens in education in the Russian Federation.

The two sides also discussed innovative ways of doing business, including through barter and agreed to explore the option further. In the context of the desire of both parties to promote regional integration and Eurasian connectivity, the two sides agreed to share information about developing and improving rail and road infrastructure.

The following documents were also signed during the session:

i. Agreement regarding Cooperation and mutual assistance in Customs matters between the Government of the Russian Federation & the Islamic Republic of Pakistan.

ii. Protocol on the exchange of documents and data on the Customs value of goods transported between the Russian Federation and the Islamic Republic of Pakistan.

iii. Working agreement on Airworthiness of Aeronautical products.

Copyright Business Recorder, 2023

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