Pakistan has paid for its first G2G import of discounted Russian crude in Chinese currency, the South Asian country’s oil minister said today, marking a major shift in its export payments policy dominated by US dollar.

Discounted crude offers Pakistan a breather as it faces an acute balance-of-payments crisis and risks defaulting on its debt obligations. The foreign exchange reserves held by the central bank are barely enough to cover four weeks of controlled imports.

The first cargo of discounted Russian crude oil sealed under the new deal reached earlier this year between Islamabad and Moscow arrived in Karachi on Sunday. It is currently being unloaded at the port of the southern city of Karachi.

Oil Minister Musadiq Malik, speaking to Reuters by phone, did not disclose commercial details of the deal, including pricing or the discount made in Pakistan.

Malik said the purchase, under Pakistan’s first intergovernmental agreement with Russia, includes 100,000 tonnes of which 45,000 have arrived at Karachi port while the rest are en route. Pakistan made this purchase in April.

The purchase by Pakistan gives Moscow a new outlet to expand growing sales to India and China as it diverts oil from Western markets because of the conflict in Ukraine.

Pakistan, despite being a longtime ally of the West and the arch-rival of neighboring India, which is historically closer to Moscow, analysts say its crude deal also presents a new path for the country in a a time when his financial needs are great.

Pakistan Refinery (PRL) will initially refine Russian crude, the minister said. The cargo was earlier referred to as a trial run to assess economic and technical feasibility.

Malik today downplayed concerns about economic viability and concerns about the ability of domestic refiners to process Russian crude given Pakistan’s historical imports of Middle Eastern oil.

“We’ve worked on different product mixes and no scenario predicts that refining this crude will make a loss,” Malik said, adding: “We’re very confident that it will be commercially viable.”

“No (adjustments) were needed at the refinery to refine the Russian crude,” the minister told Reuters.

Energy imports account for the majority of Pakistan’s export payments. Islamabad imported 154,000 barrels of oil per day in 2022, almost the same amounts as the previous year, according to statistics from analysis firm Kpler.

Crude oil was mainly supplied by the world’s top exporter, Saudi Arabia, followed by the United Arab Emirates. In theory the 100,000 barrels per day to be imported from Russia reduces Pakistan’s need for fuel from the Middle East.