PSO, SBP team up to streamline banking process for Russian oil imports

KARACHI: Pakistan State Oil (PSO) and State Bank of Pakistan (SBP) are working on banking channel arrangements for import of crude oil from Russia, sources told The News on Friday.

The government is eyeing import of Russian crude oil by April end. State Minister for Petroleum Dr. Musadik Malik has also earlier told media that crude oil supply from Russia would start by end of the current month. The sources, however, believed that the crude oil supply from Russia might take some more time and might be possible to come by mid of May, if things went on smoothly as per the scheme.

Sources familiar with the developments on Russian crude oil supply to Pakistan said both sides could sign the contract by mid or third week of April. They were of the view that for contracting the sign, finalisation of banking channel arrangements was necessary, and both PSO and SBP had been tasked to work on the arrangements to make progress towards receiving supply from Russia. They also pointed out that banking channel arrangements were important for Russian crude oil supply to decide what currency would be used for the supply. There are three currencies in consideration including USA dollar, UAE Dirham, and Chinese Yuan, as Russian side sought the payment in one of three currencies. The decision is yet to be taken as per the sources.

The sources added that it was not clear as whether the price of Russian oil to Pakistan would be as per the cap placed by G-7 countries for buying the Russian oil, as the price is still being worked out in that regard.

The News reported last month that the government was trying to procure Russian crude oil at $50 per barrel, which is $10 dollar below the cap imposed by G-7 countries on the Russian crude oil buying. However, no decision has been taken as yet, according to the sources.

They stated that if the crude oil was purchased as per the capping of G-7 countries, the freight cost and insurance premium cost would make the price of Russian crude oil almost equal to the crude oil Pakistan is buying from the other countries.

The Russian crude oil buying surfaced first time in February last year when then Prime Minister Imran Khan visited Russia. After his departure from power in April last year, the new government also announced to work on it and a high powered delegation visited Russian in November last year, followed by a Russian delegation that visited Pakistan in January 2023, to work out the modalities for the oil supply from Russia to Pakistan.