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Pakistan will import around 32.7 million barrels of crude oil under its agreement signed with the Saudi Fund for Development (SFD) on deferred payment during 2022, reported APP.

“Pak-Arab Refinery Company Limited (PARCO) and National Refinery Limited (NRL) are planning to import 16.89 and 15.81 million barrels of oil in the year 2022, respectively,” according to an official document available with state-run APP.

As per the agreement, crude oil worth $100 million per month for one year could be imported on deferred payment.

“The price will be as per existing long-term agreements/contracts between Saudi Aramco, PARCO and NRL,” it added.

“The facility will be available for a 12-month period which may be extended for 1 year upon consent of the parties. Repayment of the withdrawn amounts plus the margin at the rate of 3.8% shall be made in one annual installment in US$.”

Back in February, then Finance Minister Shaukat Tarin informed the upper house that Pakistan will start utilising the Saudi oil facility on deferred payments from March.

The Financing Agreement worth $1.2 billion for import for petroleum products was signed on 29th November 2021 between the Saudi Fund for Development (SFD) and Economic Affairs Division (EAD), Pakistan.

As per the Financing Agreement, the SFD will extend the financing facility up to $100 million per month for one year for the purchase of petroleum products on a deferred payment basis.

Oil imports account for a major chunk of Pakistan’s import bill, and during the first eight months of the fiscal year, Pakistan imported petroleum products worth $12.941 billion as compared to $6.446 billion in the same period last year, an increase of over 101%.

The country’s overall imports increased by 48.6% during the first nine months (July-March) of the current fiscal year and stood at $58.691 billion compared to $39.489 billion during the same period of the corresponding year, revealed Pakistan Bureau of Statistics (PBS) data.

The rise in imports widened the trade deficit by 70.1% during the first nine months (July-March) of the current fiscal year, 2021-22, and reached $35.393 billion compared to $20.802 billion during the same period of 2020-21.

A senior official privy to the petroleum sector developments told APP that the government had given the Exploration and Production companies, operating in Pakistan, a target to produce around 29 million barrels of crude oil during the current fiscal year.

The companies had produced 27 million barrels of oil in 2020-21, he added.

The story was originally published in Business Recorder on April 05, 2022.