The United States has termed the recent oil deal between Pakistan and Russia a “sovereign decision” between the two states, saying the move doesn’t intend to pull Moscow “off the energy market”.

“One of the reasons that the United States, through the G7, has been a big proponent of the price cap is to ensure that steps are not being taken to keep Russian energy off the market because we understand that there is a demand for supply,” said US State Department spokesperson Vedant Patel in a news briefing on Tuesday.

He said, “But we also need to take steps to ensure that Russians – Russian energy markets are not turning out to be a windfall for Putin’s war machine.” “And so, again, countries will make their own sovereign decisions. We have never tried to keep Russian energy off the market.”

The statement comes after Pakistan placed its first order for discounted Russian crude oil under a deal struck between Islamabad and Moscow with one cargo to dock at Karachi port in May.

The deal will see Pakistan buy crude oil only, not refined fuels, and imports are expected to reach 100,000 barrels per day if the first transaction goes through smoothly, Minister for Petroleum Musadik Malik was quoted as saying. “Our orders are in, we have placed that already,” he said.

The minister said Pakistan Refinery Limited (PRL) will initially refine the Russian crude, with other refineries to be included later after a trial run.

Russian Energy Minister Nikolay Shulginov led a delegation to Islamabad in January to hold talks on the deal, after which he said oil exports to Pakistan could begin after March.

At the time, Shulginov also said Pakistan will pay for crude oil purchases in currencies of friendly countries.

“We have agreed that the payments will be made in the currencies of friendly countries,” he had said at a joint news conference with Pakistan’s Economic Affairs Minister Ayaz Sadiq back then.

He didn’t specify the ‘friendly countries’ and neither of the two ministers gave details on the size of the planned purchases.

Earlier, Malik had said that crude oil supply from Russia to Pakistan will start by the end of this month. Last year, Pakistan sent officials to Russia, after Malik said Moscow would sell crude oil at a discounted rate.

— Pakistan, Russia conclude second round of talks, negotiate payment mode —

Pakistan and Russia concluded the second round of talks over crude oil imports on April 15 this year, moving one step forward in deciding the mode of payment, sources claim.

Sources further claimed Russian crude oil is expected to arrive in Pakistan in May if the order was successfully placed. The two sides held talks in Karachi on April 13-15, but no official statement was issued by any of the side.

The sources said Russian delegates advised the Pakistani to stay away from the media regarding discount in crude oil price and mode of payment deal. The top functionaries decided not to disclose the mode of payment and the exact discount.

Earlier, the technical teams of the Operational Services Center (PSC), a Russian state-owned entity, held talks for two days on March 21-22 with the Pakistan State Oil (PSO) team, which ended without progress on the constitution of Special Purpose Vehicle (SPV) responsible not only for importing the crude but also for the payments.

Commercial analysis has been worked out this time as to whether the import of crude from Russia would benefit Pakistan’s economy and to what extent. Since it was analysed that the import would be of benefit, Pakistan decided to go for the deal.

Sources said Russia during the latest talks asked for payment in China’s yuan or rouble, but Pakistan wanted to pay in Pak rupee. “The Russian ship will arrive in 26 days, most probably by the middle of May,” they added.

The current brent price in the international market stands at $85.16 per barrel whereas Russian oil is available at $47-48 per barrel.

Sources further said the State Bank of Pakistan (SBP) earlier asked some local banks, including the National Bank of Pakistan, to open letters of credit for importing Russian oil. Local banks have shown willingness, but with some hesitance mainly because of the G7 countries’ regulations following the price cap of $60 per barrel or below, and making the payments under the Society for Worldwide Interbank Financial Telecommunications (SWIFT) arrangement.