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Saudi Arabia shelves US$3.2bn oil supply deal with Pakistan

A November 2018 arrangement between Pakistan and Saudi Arabia to supply US$3.2bn worth of Saudi oil on deferred payments expired in June 2020 and is still to be renewed, as Saudi Arabia would be awaiting Pakistan's request to renew the arrangement. Pakistan was expecting to import US$1bn worth of oil in the fiscal year 2020-2021, which started in July 2020, but Saudi Arabia is yet to renew the deal. The US$3.2bn Saudi oil facility, which was part of the US$6.2bn Saudi Arabian package announced in November 2018, had the provision of renewal for two more years.

Under the agreement, the Pak-Arab Refinery Company (Parco) and the National Refinery Limited (NRL) were supposed to import crude oil from Saudi Aramco, and Pakistan State Oil (PSO) and Pakistan LNG Limited (PLL) were to buy petroleum products and LNG from Saudi Aramco. In addition, Saudi Arabia also lent US$3bn to Pakistan, which has prematurely returned US$1bn and may reimburse another US$2bn.

The United Arab Emirates (UAE) also offered a US$6.2bn package for Pakistan in December 2018, including a US$3.2bn oil facility. However, at a later stage, the country reduced its financial support to US$2bn and postponed the oil deal. Pakistan imports most of its crude oil from the UAE and Saudi Arabia. Imports accounts for 75% of the country’s oil domestic consumption.