Pakistan requests $6.7 billion concessional oil financing package from Saudi Arabia

Pakistan has requested a concessional oil financing package of $6.7 billion from Saudi Arabia to deal with the potential impact of high oil prices in the global market due to ongoing tensions in the Middle East and to ensure energy security.

A spokesperson for the Ministry of Economic Affairs confirmed to The Express Tribune that a facility related to the supply of oil on deferred payment from Saudi Arabia is under consideration between the two countries.

According to sources, Pakistan has requested an oil financing facility of $6.7 billion from Saudi Arabia at an interest rate of one percent for a period of 15 years. Negotiations have also been held at the ministerial level in this regard.

Pakistan has proposed a grace period of 5 years before the loan is repaid and a total repayment period of 15 years. The spokesperson for the Ministry of Economic Affairs said that this issue is under consideration between the two governments.

He was responding to a question about whether Pakistan had formally requested a 15-year oil financing facility at one percent interest from the Saudi Fund for Development (SFD).

Saudi Arabia has been supplying oil to Pakistan on a one-year deferred payment basis since 2019. The last agreement in this regard was signed in February 2025, which expired in April 2025.

Earlier, a $1.2 billion oil import financing agreement was signed between the Saudi Fund for Development and the then Secretary of the Ministry of Economic Affairs.

According to ministry officials, the interest rate on this facility, which was agreed before the Pak-Saudi Strategic Partnership, was 6 percent.

Since 2019, the Saudi Fund for Development has provided a total of about $6.7 billion in financial assistance to Pakistan for oil imports. According to government sources, Pakistan is also considering various options to reduce the burden of repaying its outstanding external debts, especially those for energy projects acquired from China, in the next few years.

Officials say that if a workable solution is found to repay these debts, the need for a new program may be reduced after the current IMF program ends in September next year.

According to the State Bank, Pakistan imported petroleum products worth $14 billion during the July-May period of the last fiscal year.

Total imports remained at about the same level as last year due to a $1.2 billion drop in liquefied natural gas (LNG) imports.

Saudi Arabia has emerged as Pakistan’s largest bilateral financial supporter after China. Recently, the Saudi Fund for Development also provided Pakistan with a $3 billion short-term deposit to help it repay its debt to the United Arab Emirates.

On Sunday, Federal Finance Minister Muhammad Aurangzeb and Federal Energy Minister Sardar Owais Leghari met with Saudi Finance Minister Muhammad bin Abdullah Al-Jadaan, in which they agreed to further promote bilateral economic and energy cooperation.

Saudi Arabia has also been assuring the IMF of maintaining its cash deposits in Pakistan. By the beginning of July this year, Saudi Arabia’s total cash deposits in Pakistan had reached $8 billion.

In a statement issued after the recent approval of a $1.3 billion loan, the IMF Executive Director had said that the Pakistani authorities appreciate the continued financial support and trust of their bilateral and multilateral partners, especially China and Saudi Arabia.

During the last fiscal year, Saudi Arabia was the largest source of remittances from overseas Pakistanis, from where $9.8 billion was sent home, which constitutes 24 percent of the total remittances received by Pakistan.