Oil from Russia.

The 'conceptual agreements' reached between Pakistan and Russia for the supply of Russian crude oil on Friday signify the first tangible step towards bilateral cooperation in oil trade. If everything goes according to plan, with the key issues of insurance, transportation, volume and payment mechanism being addressed, a final agreement is expected to be concluded by late March, giving an opportunity to Pakistan to buy Russian crude at discounted rates.

The two sides have agreed in principle that the payment can be made in the 'currencies of friendly countries', though the issue is still being thrashed out.

Facing a dollar crunch, Pakistan may use the Chinese yuan to pay for its purchases once the supplies begin. Pakistani officials claim that all issues were sorted out during Russian Energy Minister Nikolay Shulginov's visit for an intergovernmental commission meeting, while the Russians say that matters are 'in the final stage of agreement'.

Once a 'consensus on the technical specification [is] achieved, the oil and gas trade transactions will be structured in a way it has mutual benefit for both countries', said a joint statement.

Energy accounts for the largest portion of Pakistan's imports, and cheaper oil from Russia will help somewhat lower the burgeoning trade deficit at the heart of our balance-of-payments crisis that has seen foreign currency stocks deplete to $4.3bn from over $17bn in the last one year. Islamabad plans to procure at least 35pc of its annual crude...

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