Tag: oil imports

  • One rupee relief: Petroleum Division reveals ‘benefit’ of importing Russian crude

    The Petroleum Division has presented a comprehensive briefing to the caretaker Prime Minister, Anwaar ul Haq Kakar, regarding the potential impact of Russian crude oil on petroleum prices in Pakistan.

    According to The News, the Petroleum Division highlighted that the projected benefit to consumers resulting from the import of Russian crude oil remains relatively modest, at approximately Re1 per litre for both petrol and diesel. This assessment takes into account various operational intricacies and market dynamics.

    Importing Russian crude oil carries two notable risks, the division stated. The first pertains to the duration of transportation, which spans between 30 and 36 days, and the second revolves around the production of furnace oil.

    Approximately 60 per cent of furnace oil generated from Russian crude must be exported, incurring a 25 per cent loss in the process.

    It is significant to note that, currently, only the Pakistan Refinery Limited (PRL) has expressed readiness to refine Russian oil. However, if PRL assumes the responsibility of refining Russian oil exclusively, only a nominal Re1 relief can be passed on to consumers for each litre of gasoline and diesel.

    In a potential collaborative effort, the prime minister was informed that if PARCO (Pak-Arab Refinery Company) and NRL (National Refinery Limited) jointly undertake the refining of Russian oil, the benefit to consumers could potentially increase to Rs3 per litre. The magnitude of this relief would be contingent on the volume of Russian crude involved in the process.

    PARCO, as a comparatively modern refinery with superior facilities, is expected to contribute to enhanced yields from Russian crude and, consequently, a reduction in the production of furnace oil. However, it was also revealed that both PARCO and NRL have declined the proposition to refine Russian oil.

    The caretaker Prime Minister, Anwaar ul Haq Kakar, has expressed the need for a thorough evaluation of the situation, considering the potential benefits, risks, and the willingness of refineries to participate in the process. The decision regarding the import and refining of Russian crude oil remains a pivotal concern as Pakistan navigates its energy landscape in the coming days.

    This development emphasises the intricate balance between economic considerations and strategic decisions in the energy sector that Pakistan faces as it grapples with global oil market dynamics.

  • First-ever discounted Russian crude oil cargo arrives in Karachi

    First-ever discounted Russian crude oil cargo arrives in Karachi

    Under a newly established agreement between Islamabad and Moscow, the inaugural shipment of discounted Russian crude oil arrived in Karachi on Sunday, marking the beginning of enhanced trade relations between the two nations.

    Departing from Russia over a month ago, the oil cargo reached Pakistan via Oman. Officials announced that the unloading process would commence on Monday, with the oil undergoing processing at the Pakistan Refinery Limited (PRL).

    During its lengthy voyage, the 100,000 metric ton oil shipment was divided into two parts in Oman due to the Karachi port’s limited capacity to accommodate larger vessels. Subsequently, two smaller ships, each carrying 50,000 metric tons of oil, embarked on their journey to Karachi.

    Upon the cargo’s arrival, Prime Minister Shehbaz Sharif expressed his enthusiasm on Twitter, describing Sunday as a “transformative day” and affirming the fulfillment of his commitment to the nation.

    He expressed the belief that these developments would contribute incrementally to prosperity, economic growth, energy security, and affordability. The Prime Minister further recognised and commended all those involved in this national endeavor who helped turn the promise of Russian oil imports into reality.

    Sources indicate that this Russian oil shipment will not be subject to the existing domestic oil pricing mechanism in the country. Consequently, the PRL will assume the benefits or losses associated with the Russian oil. Additionally, the sources stated that this shipment serves as a test case to evaluate the quality of the crude oil and the ratio of refined products. A report will be submitted to the federal government to inform future decisions regarding long-term commercial oil agreements.

    Pakistan had secured its order for the initial cargo of Russian crude oil at a discounted rate of up to $18 per barrel. Following the Platts crude oil prices, Islamabad applied a discount ranging from $16 to $18 per barrel, according to insider information.

  • Pakistan buys Russian oil amid chronic energy shortages

    Pakistan, which is facing a severe economic crisis and chronic energy shortages, has turned to Russia for oil imports. However, Pakistan’s petroleum minister, Musadik Malik, believes that the future of energy lies in diversification, particularly towards green energy sources.

    During his visit to the United States, Malik confirmed that Pakistan had placed an initial order for Russian oil, which will arrive within a month, and based on the results, the country will assess how much to import in the future.

    Pakistan, which imports 84 per cent of its petroleum products, mainly from Gulf Arab allies Saudi Arabia and the United Arab Emirates, has been transparent about its dealings with Russia. Malik stated that their initial dealings with Moscow were far less than those of other countries, particularly China and India, whose enthusiastic buying of Russian oil has cast a shadow over India’s warming relationship with Washington.

    Malik spoke with US companies during his visit about buying shale liquified natural gas, upgrading Pakistani refineries and storage facilities, exploring offshore oil and gas and starting horizontal drilling, a method that Pakistan has not yet used.

    However, he emphasized that his talks with the United States also included support for green energy sources, in line with Pakistan’s goal of generating 30 per cent of its electricity from renewables by 2030, including a plan for widespread solar power on rooftops.

    Pakistan is one of the nations most vulnerable to climate change, with floods last year submerging one-third of the country. Geoffrey Pyatt, the assistant secretary of state for energy resources, has promised US backing for Pakistan’s renewable goals during his visit to the country.

    According to France24, Malik also believes that the future of energy security lies in green energy sources. Although Pakistan’s share of Russian oil imports is small, it helps, and the country is open to cheaper sources of energy.

  • Pakistan moves closer to finalising oil deal with Russia as team arrives in Karachi

    Pakistan has taken a step forward in its efforts to secure a loan deal with Russia, as a delegation has arrived in Karachi to finalise a crude oil deal with Pakistan State Oil (PSO). However, the Energy Ministry has not yet revealed the payment method or the discount rate for the crude oil prices, keeping it confidential for now.

    Technical teams from the Operational Services Centre held talks with the PSO team last month, but progress was not made on the constitution of a Special Purpose Vehicle responsible for importing crude and making payments. The Russian delegation is now in Pakistan to finalise the government-to-government agreement, including the mode of payment. Pakistan wants to pay in rupee, while Russia is asking for payment in China’s Yuan or Ruble. Once the deal is done, Pakistan will place an order with Russia for crude oil purchase.

    According to sources, the Russian ship will arrive in mid-May, and the current Brent price in the international market is $85.16 per barrel, while Russian oil is available at $47-48 per barrel. The State Bank of Pakistan (SBP) is asking local banks to open letters of credit for importing Russian oil, but they are hesitant to do so mainly because of the G7 countries’ regulations of following the price cap of $60 per barrel or below it and making payments under Society for Worldwide Interbank Financial Telecommunications (SWIFT) arrangement.

    PSO has never imported crude oil before, and refineries have been importing crude under long-term agreements from ADNOC and Saudi Aramco. However, in the case of Russian crude, refineries will not be involved in the import, but it will be an SPV with representatives from PSO and PSC. Pakistan may get Russian crude price with a discount close to $50 per barrel, $10 per barrel below the cap price imposed by G7 countries on Russian oil in the wake of the war on Ukraine.

    One of the top officials in the coalition government suggests that the decision to import Russian crude under the government-to-government agreement at a 30 per cent discount may not provide the required relief as shipping and refining costs will erode the maximum discount. Additionally, Pakistan refineries will only be able to extract 10 per cent MS out of Ural crude and 50 per cent furnace oil.

    The government needs to conduct a commercial analysis to determine if importing Russian oil will benefit Pakistan’s economy and to what extent. Industrial sources suggest that the government should evaluate the economic benefits of importing Russian oil carefully.

  • Rupee depreciation may lead to an increase in petroleum prices, says Musadik Malik

    Rupee depreciation may lead to an increase in petroleum prices, says Musadik Malik

    Dr Musadik Malik, the State Minister for Petroleum, issued a warning on the potential increase of petroleum product prices due to the significant decline in the value of the Pakistani rupee against the US dollar.

    During an appearance on the Geo News program “Capital Talk” on Thursday, Dr Malik stated that the depreciation of the rupee could lead to an upsurge in the prices of petroleum products in the upcoming days. He also shared that the negotiations between Pakistan and Russia on oil imports were progressing well.

    According to Dr Malik, the sudden increase in the US dollar’s price was due to political instability, making it difficult to govern the country in such an uncertain environment. Notably, during the last fortnight’s review, Finance Minister Ishaq Dar announced a reduction in petroleum prices.

    As a result, the government cut the price of petrol by Rs5 per litre, setting it at Rs267 per litre, while the price of diesel remained steady at Rs280 per litre.

    In addition, the price of light diesel oil decreased by Rs12 per litre, bringing it down to Rs184.68 per litre. Furthermore, the cost of kerosene oil was reduced by Rs15 per litre, bringing its price to Rs187.73.