ISLAMABAD/LAHORE: In a welcoming development, the much-awaited cargo of 50,000 tons of discounted Russian crude oil docked at the Karachi Port Trust (KPT) at 3am on Sunday. The vessel reached the Pakistani waters from the Port of Oman.
“A cargo ship carrying Russian crude reached the Karachi Port Trust (KPT) jurisdiction at 3am on Sunday and formally anchored at the KPT,” a top official of Pakistan State Oil confirmed while talking to this reporter.
From Monday (today), the process to offload the crude will kick off and it will be stored in the Pakistan Refinery Limited (PRL) storages.
After refining the crude, a test report will be submitted to the government on the quality, yields, transportation cost and commercial viability of the crude oil. Following the approval of the report, the government will go for GtG long-term deal with Russia.
The official said the Russian cargo, as a pilot vessel carrying 100,000 tons of crude oil, reached the Omani port of Duqm on June 7, behind the schedule as it was supposed to reach Oman on May 27-28.
However, from Oman, a smaller ship having capacity of 50,000 tons was arranged by the Russian authorities to transport the crude to Pakistan. The ship will get back to Duqm and bring back the remaining 50,000 tons of crude oil by June 20.
Explaining the reasons behind the belated arrival of Russian cargo at the Oman port, the official said, “The vessel, which was loaded with Ural crude on April 21 at a Russian port, got delayed by 10 days due to technical reasons. It then arrived at Egypt’s Suez Canal on May 17, where it waited in a long queue for 12 days to cross the canal.”
The vessel reached Duqm on June 7 after a two-day journey across the Red Sea.
“The delay in the arrival of the cargo will not increase the transportation cost, as it is already settled with the Russians,” he said. “The PRL will refine the crude oil, blending it with the crude imported from the United Arab Emirates and Saudi Aramco.”
The PRL has been assigned to submit the test report to the government on the quality, yields and commercial viability of the oil.
The test cargo will also help the government assess the transportation costs, refining costs and margins for refineries and also to know how smooth the payment mechanism that has been carved out based on Yuan currency.
Pakistan imports 70 percent of its crude oil, which is refined by the PRL, National Refinery Limited, Pak Arab Refinery Limited and Byco Petroleum.
The remaining 30 percent is locally produced and refined by the local refineries, including Attock Refinery Limited. The move comes as Pakistan is looking to diversify its sources of oil imports amid rising global prices.
Russia is a major producer of crude oil and has offered the country discounted oil prices. The payment for the Russian crude will be made in Yuan through the Bank of China.
To a question, the official said the commercial analysis of Russian crude was favourable but it would be further cross-checked after refining.
The shipping cost of the Russian oil has also been estimated somewhere at $15 per barrel, but it will be finalized after it arrives at the local port. The official said, as per an estimation, the URAL crude will produce 50 percent furnace oil and 15-20 percent petrol. The local refineries currently produce Motor Spirit (Petrol) at 30 percent and furnace oil at 45 percent by using the crude of Saudi Aramco and ADNOC.
The Russian crude is reported to have come to Pakistan at $50-52 per barrel against the price cap of $60 per barrel imposed by the G7 countries, so at this cost, the furnace oil cost may go in a positive trajectory.
Pakistan had earlier desired to get the Russian crude price at a discount close to $50 per barrel, $10/barrel below the cap price imposed by G7 countries on the Russian oil in the wake of the war on Ukraine.
Under a long-term agreement, the government will have to decide the volume of crude per annum Pakistan will import. The Pakistan Refinery Limited has the capacity to refine 50,000 barrels per day.
“We have to include PARCO (Pak-Arab Refinery Company) and NRL (National Refinery Limited) to utilize the Russian blended crude oil under the GtG agreement,” the official said.
Meanwhile, expressing his joy and satisfaction over the arrival of the Russian crude oil at the Karachi Port Trust on Sunday, Prime Minister Shehbaz Sharif said he had fulfilled another of his promises to the nation.
“Glad to announce that the first Russian discounted crude oil cargo has arrived in Karachi and will begin oil discharge tomorrow. Today is a transformative day. We are moving one step at a time toward prosperity, economic growth and energy security & affordability. This is the first-ever Russian oil cargo to Pakistan and the beginning of a new relationship between Pakistan and the Russian Federation.
“I commend all those who remained part of this national endeavour & contributed to translating the promise of Russian oil import into reality,” he concluded.
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