Saudi Arabia, Pakistan Ink $1.24 Billion Deals for Oil, Water

Saudi Arabia and Pakistan signed two financing agreements on February 3, 2025, totaling US$1.241 billion, covering oil derivatives imports and a water supply project. The agreements were formalized in Islamabad between Sultan Al-Marshad, Chief Executive of the Saudi Fund for Development (SFD), and Pakistani Secretary for Economic Affairs Dr. Kazim Niaz. Witnessed by Pakistani Prime Minister Muhammad Shehbaz Sharif and Saudi Ambassador to Pakistan Nawaf bin Said Al-Malki, the deals underscore the deep bilateral ties and Saudi Arabia’s continued support for Pakistan’s economic stability.

Context and Background

This latest agreement builds on Saudi Arabia’s long-standing partnership with Pakistan, particularly through the SFD’s oil derivatives program. Since 2019, the SFD has provided approximately US$6.7 billion in financing for oil derivatives, helping Pakistan manage energy costs and reduce fiscal pressures. The new US$1.2 billion financing for oil imports is part of this ongoing support, aimed at bolstering Pakistan’s economy and addressing its energy needs.

Key Details

The oil derivatives agreement will assist Pakistan in securing essential fuel supplies, stabilizing its energy sector, and supporting industrial growth. Separately, a US$41 million soft loan was signed to finance a drinking water supply project in Mansehra, a city in Khyber Pakhtunkhwa province. The project includes supplying about 400 kilometers of pipes for water networks and building a water treatment plant with a capacity of 21,000 cubic meters per day, benefiting over 150,000 residents. It aims to reduce waterborne diseases and improve public health. During the signing ceremony, the prime minister and SFD chief discussed expanding cooperation in vital sectors across Pakistan.

International Impact

These agreements reflect the SFD’s broader commitment to supporting developing countries in overcoming developmental challenges. The SFD’s efforts promote international cooperation and solidarity, aligning with global sustainable development goals. Saudi Arabia’s consistent support enhances its role as a key partner in regional stability and economic resilience, particularly in South Asia.

Vision 2030 Alignment

The financing agreements align with Saudi Arabia’s Vision 2030, which emphasizes strengthening international partnerships and fostering sustainable development. By supporting Pakistan’s energy and water infrastructure, the Kingdom demonstrates its commitment to regional prosperity and long-term economic cooperation. Such initiatives also open avenues for Saudi investments and expertise, contributing to mutual growth and the realization of Vision 2030’s global engagement objectives.

20 Questions

Q1. What was the total value of the financing agreements signed between Saudi Arabia and Pakistan on February 3, 2025?

A1. The total value of the two financing agreements was US$1.241 billion, comprising US$1.2 billion for oil derivatives and US$41 million for a water supply project.

Q2. Who signed the agreements on behalf of Saudi Arabia?

A2. The agreements were signed by Sultan Al-Marshad, Chief Executive of the Saudi Fund for Development (SFD).

Q3. Who represented Pakistan in the signing ceremony?

A3. Dr. Kazim Niaz, Secretary for the Ministry of Economic Affairs of Pakistan, signed on behalf of Pakistan.

Q4. Which Saudi official witnessed the signing?

A4. Saudi Ambassador to Pakistan Nawaf bin Said Al-Malki witnessed the signing ceremony.

Q5. What is the purpose of the US$1.2 billion oil derivatives financing?

A5. The financing supports Pakistan in importing oil derivatives to stabilize its energy sector, reduce fiscal pressures, and boost economic growth.

Q6. How much has the SFD provided in oil derivatives financing to Pakistan since 2019?

A6. The SFD has provided approximately US$6.7 billion in financing for oil derivatives to Pakistan since 2019.

Q7. What is the Mansehra water supply project’s goal?

A7. The project aims to supply clean drinking water to over 150,000 residents in Mansehra through new pipelines and a water treatment plant.

Q8. How many kilometers of pipes will be supplied for the water project?

A8. The project involves supplying about 400 kilometers of pipes for water distribution networks.

Q9. What capacity will the water treatment plant have?

A9. The water treatment plant will have a capacity of 21,000 cubic meters per day.

Q10. How will the water project benefit public health?

A10. By improving access to clean water, it will reduce waterborne diseases and epidemics in the region.

Q11. What type of loan was provided for the water project?

A11. The US$41 million was provided as a development soft loan with concessional terms.

Q12. Which Saudi agency is responsible for these financing agreements?

A12. The Saudi Fund for Development (SFD) is the agency that signed and manages these agreements.

Q13. What sectors do the two agreements cover?

A13. They cover the energy sector (oil derivatives) and the water infrastructure sector (drinking water supply).

Q14. How does the oil derivatives agreement support Pakistan’s economy?

A14. It helps Pakistan secure fuel for power generation and industry, reducing energy costs and supporting economic activity.

Q15. What did the Pakistani prime minister discuss with the SFD chief?

A15. They discussed enhancing bilateral cooperation and financing for vital sectors, including energy and infrastructure.

Q16. How does Saudi support align with its global role?

A16. The SFD’s financing reinforces Saudi Arabia’s commitment to international development and solidarity with partner nations.

Q17. What is the broader significance of the SFD’s work?

A17. The SFD addresses developmental challenges in developing countries, promoting sustainable growth and economic stability.

Q18. How do these agreements relate to Vision 2030?

A18. They support Vision 2030’s goal of strengthening international partnerships and contributing to global sustainable development.

Q19. What type of agreement was signed for the oil derivatives?

A19. A financing agreement was signed to provide funding for the import of oil derivatives, structured as concessional support.

Q20. Why are these agreements important for Saudi-Pakistan relations?

A20. They deepen the longstanding strategic partnership, demonstrating Saudi Arabia’s continued commitment to Pakistan’s economic resilience and development.

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