RIYADH, Jan 5: Saudi Arabia has reached an agreement with Pakistan to supply oil worth $1.3 billion, with the deferred payment facility, to help it build its oil reserves, the OPEC news agency reported.

Prime Minister Zafarullah Jamali during his just concluded three-day visit to the Kingdom had requested for continuing the facility of deferred payment

for another financial year. As a gesture of goodwill and in view of strong relations between the two countries, Saudi Arabia agreed to extend the financing facility.

Pakistan needs to boost its reserves due to fears of a possible US-led attack on Iraq, Pakistan’s petroleum ministry official had earlier told the press. Islamabad’s oil imports are likely to cost $3.5 billion by the end of the current fiscal year. Pakistan apparently wants to curtail its oil import bill and put in place measures that could absorb any shock on its foreign exchange reserves in case of a US-led war on Iraq.

“Secure, continued and uninterrupted supply is the main concern for Pakistan, while special pricing or grant is secondary,” a senior Pakistani official, keeping a close watch on the oil supplies situation, was quoted as saying by Dow Jones.

Saudi Arabia and Kuwait are the major oil suppliers to Pakistan, meeting the country’s 90 per cent oil requirements.