According to source, Pakistan has placed its first purchase for cheap Russian crude, with one cargo due to arrive at Karachi port in May.
Energy Minister Musadik Malik confirmed the transaction late Wednesday. “Our orders are in, we have placed that already,” he said, adding that “we will be getting only crude, not refined oil”.
He stated that the Russian crude will initially be refined by Pakistan’s Refinery Limited (PRL), with additional refineries joining later following early trials.
Pakistan placed it’s order for oil
Pakistan would only buy crude oil and not processed fuels, and imports could reach 100,000 barrels per day if the initial transaction goes properly.
It is worth noting that in January, Minister of State for Petroleum Musadik Malik stated that Pakistan and Russia had agreed on a late March deadline for the crude oil agreement.
Russian Energy Minister Nikolay Shulginov, who led Moscow’s delegation to Islamabad to negotiate the agreement, stated at the time that oil deliveries to Pakistan might begin as early as March.
According to a person acquainted with the negotiations in Moscow, the final agreement was struck in recent days.
A request for response from the Russian government
Major Russian oil corporations have discussed the possibility of supplying oil to Pakistan in recent months, according to two trading sources familiar with the discussions, who declined to name potential providers. According to one of the sources, who spoke on the condition of anonymity, Russia intends to export Urals crude to Pakistan.
According to statistics from analytics firm Kpler, Islamabad bought 154,000 bpd of oil in 2022, around the same as the previous year.
Saudi Arabia, the world’s largest exporter, supplied the majority of the crude, followed by the United Arab Emirates. In principle, the 100,000 bpd from Russia lessens Pakistan’s reliance on Middle Eastern fuel.
When asked about the impact of Russian imports on local pricing, Malik said it will become clear once the crude was processed and ready to sale.
The US dollar has traditionally been the currency of oil trading, but the Ukraine war has reduced its supremacy as Russia avoids receiving a currency that it is mostly barred from using due to Western sanctions.
Meanwhile, Pakistan’s economic crisis has left it dangerously short of hard currency.
Malik declined to clarify whether transactions would be conducted in Chinese yuan or UAE dirham. He also declined to remark on the import rate.
“I will not disclose anything about the commercial side of the deal,” he said.
According to Malik, Pakistan’s Refinery Limited (PRL) (PKRF.PSX) will first refine the Russian crude in a trial run, followed by Pak-Arab Refinery Limited (PARCO) and other refineries.
Western nations have put a $60 per barrel price limitation on purchases of Russian oil as part of sanctions aimed at limiting Russia’s revenue for combat in Ukraine. According to merchant’s calculations, India and China have paid prices above the cap.
In January, Russian Energy Minister Nikolay Shulginov led a mission to Islamabad, following which he stated that oil supplies to Pakistan might begin in March.
Malik, in turn, led a mission to Moscow to finalise the agreement late last year.
Since early February, Pakistan and the International Monetary Fund (IMF) have been negotiating the release of a $1.1 billion tranche of a $6.5 billion bailout approved in 2019.
Major Russian oil corporations have discussed the possibility of supplying oil to Pakistan in recent months, according to two trading sources familiar with the discussions, who declined to name potential providers. According to one of the sources, who spoke on the condition of anonymity, Russia intends to export Urals crude to Pakistan.
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