ISLAMABAD: Pakistan is one step closer to sealing its loan deal with Russia as a team from Pakistan State Oil (PSO) has arrived in Karachi to finalize the crude oil deal with its counterparts.
“This time, we are expecting all the hurdles in importing crude oil from Russia to be removed,” the official said. However, the Ministry of Energy is silent on the mechanism of payment and concession in crude oil prices.
It may be noted that last month, technical teams from the Operational Services Center (PSC), a Russian government agency, held two-day talks with the PSO team on March 21-22, which ended without progress on the special constitution. Done. The Special Purpose Vehicle (SPV) is responsible not only for the import of crude oil but also for payments.
“The Russian delegation is now here to finalize the government-to-government agreement, including the mode of payment. Russia is currently asking for payment in Chinese yuan or rubles, but Pakistan wants to pay in rupees,” the official said. told the publication.
According to insider sources, after the agreement, Pakistan will place an order for the purchase of crude oil from Russia.
“The Russian ship will arrive in 26 days, probably by mid-May. The current price of Brent in the international market is $85.16 per barrel while Russian oil is available at $47-48 per barrel.
Meanwhile, according to senior officials, the State Bank of Pakistan (SBP) is asking some local banks, including the National Bank of Pakistan (NBP), to open letters of credit for importing Russian oil, but they are reluctant to do so. Following a price ceiling of $60 per barrel or below, mainly due to regulations from G7 countries and payments under the Society for Worldwide Interbank Financial Telecommunications (SWIFT) arrangements.
Officials said that PSO has never imported crude oil as it only imports refined petroleum products from various sources and diesel from KPC (Kuwait Petroleum Company).
The refineries are importing crude oil under long-term contracts from ADNOC and Saudi Aramco. But in the case of Russian crude oil, the refineries will not be involved in the import, but it will be an SPV with representatives from PSO and PSC.
Officials indicated that “Pakistan can get Russian crude oil at a discount of around $50 per barrel, which is $10 less than the price imposed by the G7 countries on Russian oil in the wake of the war against Ukraine.” per barrel.”
However, a top coalition government official said the decision to import Russian crude at a 30 percent discount under a government-to-government deal may not provide the relief needed as per-barrel shipping at the port within 26 days of transfer from a Russian port to Pakistan. The cost would be $15 per barrel and the $10 per barrel refining cost would eliminate the maximum discount.
Also, Pakistan refineries will be able to extract only 10% MS and 50% furnace oil from Ural crude.
Refineries are already facing a shortage of furnace oil. The only consumption of furnace oil in Pakistan depends on running RFO based power plants.
Industry sources suggest that the government conduct a trade analysis on whether importing Russian oil would benefit Pakistan’s economy and if so, to what extent.
