Tuesday April 23, 2024

Heavier Russian crude to give 50pc FO; POL price cuts not likely

By Tanveer Malik
June 13, 2023

KARACHI: Russian crude oil will produce more furnace oil (FO) than high speed diesel (HSD), which would not reduce the prices of petroleum products domestically, The News learnt on Monday.

According to the oil industry players, arrival of the first cargo of Russian crude oil has been celebrated from the top level of the government to the media. However, the anticipated reduction in the prices of petroleum products, particularly diesel and petrol in the near future would not be possible.

Pakistan Refinery Limited (PRL) received the first cargo of Russian crude oil of 45,000 tonnes on Sunday and its discharging from the vessel started on Monday.

“The complete discharge of this crude oil will take twenty to thirty hours,” the Karachi Port Trust stated.

The oil industry people, on the other hand believed that the much-talked about Russian crude oil was being cherished as a big achievement, despite that its commercial viability did not look very promising.

They pointed out that the Russian crude oil was heavy and would produce 50 percent furnace oil, 32 percent high speed diesel, and 18 percent the rest of the products.

On the other hand, they pointed out that from the Arabian crude oil, domestic refineries were able to extract 50 percent HSD and 25 percent furnace oil.

They believed that Russian crude oil might disturb the economic pattern of the petroleum products from crude oil and for it to be more commercially viable, the price of the oil should be at a higher discounted level.

They said that the first Russian cargo is a trial, and after its processing, the report of its refining would be forwarded to the government to determine its economic viability for the country.

According to them, the buying of Russian crude oil by the current government also seems to be an attempt to defuse the narrative of the former government of Pakistan Tehreek-e-Insaf (PTI), which continuously castigated the sitting government over dragging its feet from importing crude oil from Russia.

Industry people said that the production of more furnace oil from this crude oil would be further adding to the existing stock of this fuel. Pakistan currently possess huge stocks of FO in the range of hundreds thousands tonnes due to its non-lifting by the local power plants.

They said that Pakistani refineries have been struggling to dispose of this huge stock after the power generation plants refused to stockpile FO. Refineries also exported some of the stock in the international market at a lower price in order to keep the operations of their refineries running smoothly.