Pakistan-Russia oil trade in doubt as refineries lose appetite

KARACHI: Pakistan might not import another cargo of Russian crude oil as neither country has made any moves for the purpose nor have the local refineries shown any interest, The News learnt on Wednesday.

With the current government’s tenure expiring in less than a week, the government has not given any indication that it would be placing another order with the Russian government for URAL.

As per a previous announcement of State Minister for Petroleum Dr Musadik Malik, Pakistan planned to import 100,000 tonnes of crude oil every month.

However, since the arrival of the first cargo of 100,000 tonnes in June this year, the government neither placed any order for Russian crude oil in July nor has it placed any import order for August.

“For the time being, it seems that Russian crude oil import has stopped because the government was unable to convince the local refineries,” sources in the oil sector said.

Presently, Russian crude oil import also does not look attractive as the Delivery At Port (DAP) has reached up to $78 per barrel in India and if it is imported at the same rate, it would not be an attractive option any more for the local refineries.

Pakistan Refinery Limited (PRL) was the only refinery to import Russian crude oil in June as the other refineries did not go for it due to their own commitments. Sources pointed out that now the situation is that all refineries, including PRL seem least interested to import the commodity.

Oil sector people stated that apart from the commercial feasibility and long-term contracts of refineries, government also did not work out a long-term agreement with Russia to make the import of its crude oil cheaper and attractive for the local refiners.

Also, no special purpose vehicle (SPV) was constituted to take forward Russian crude oil import on a long-term basis.

Oil sector people said that the government also did not reveal the cost of the Russian crude oil when its first shipment arrived in June, and how it impacted the ex-refinery prices of petroleum products.

They said that the impact of Russian crude oil on the local prices of diesel and gasoline was not promising and would not lower consumer prices unless imported in bulk and by all refineries. “If Pakistan places the order today, Russian oil would take one month to arrive in Pakistan. No order has been placed so far and it also seems unlikely in the near future,” they added.