Pakistani refiner Cnergyico has imported the country’s first private sector shipment of Russian crude oil.
Russian crude oil has sold at lower prices since European sanctions severely curtailed the continent’s demand for it. Pakistan has therefore been buying the Urals crude at a discounted price. Nevertheless, prices having been recovering, partly due to increased demand from Asian nations.
The average price of Urals crude oil in September 2023 was $83.08 per barrel, whereas North Sea dated oil was $93.98. Brent crude oil reached $96.55 per barrel on 27 September.
As the South Asian nation experiences economic difficulties, it is looking to take advantage of the discount on Moscow’s oil exports.
Pakistan’s first imported shipment of oil arrived in June and the second government-to-government shipment is under negotiation.
A spokesman from Cnergyico told Reutersthat the 100,000-tonne shipment of Urals crude “demonstrates the company’s capabilities and readiness to refine different types and complexities of crude oil”.
The largest refinery in Pakistan, which has a capacity of 156,000 barrels per day (bpd), is run by Cnergyico and accounts for one-third of the national capacity of 450,000bpd.
Pakistan aims to import 100,000bpd from Russia this year. The government hopes this will help offset the costs of its imports while staving off record inflation, which reached 37.97% in May 2023. In 2022, total crude imports in Pakistan were 154,000bpd.
Cnergyico will sell gas and diesel refined from its imported Urals crude locally and will export furnace oil typically used in power plants, industrial boilers and ship engines.
The spokesman from the company told Reuters: “There is ample demand for furnace oil in the global market, which can help Pakistan generate foreign exchange.”
The financial benefits of the discounted price of Russian crude are likely to be offset by increased shipping costs and lower-quality refined products, compared with fuels produced with crude from Pakistan’s usual suppliers, Saudi Arabia and the United Arab Emirates.
