Russian crude oil to arrive in Pakistan next month

Minister of State for Petroleum Dr Musadik Malik said the first consignment of crude oil from Russia will arrive in the first week of April, Radio Pakistan reported Friday.

Malik, in an interview with a private channel, said that the consignment will provide relief to the inflation-weary people.

While the federal minister did not share further details about the pricing it was earlier learnt that the Petroleum Division was trying to procure Russian crude oil at around $50 per barrel, at least $10 per barrel below the price cap imposed by the G7 countries on the precious commodity being taken from Russia due to its war on Ukraine

Officials, involved in the virtual talks with Russia, told The News that Moscow is more interested in completing all the prerequisites such as the mode of payment, shipping cost with premium, and insurance cost before signing the agreement with Pakistan.

The sources, who spoke to the publication on the condition of anonymity, said that Russia will respond about the discount in base price after the prerequisites are finalised. They added that the shipping of crude oil from Russian ports will take 30 days which would mean a $10-15 per barrel increase due to the transportation.

The talks between Moscow and Islamabad are going in a positive direction with the hope that a government-to-government deal on Russian crude import may be finalised before the end of March.

To a question, they said, the government has decided not to divulge the mode of payment to Russia against the import of crude oil. However, authorities are considering whether they should use Pakistan National Shipping Corporation (PNSC) ships or Russian tankers to transport the crude.

“We also have to keep in mind the landed cost of Russian crude as the crude vessel will arrive in 30 days, owing to which per barrel shipping cost would hover at $10-15,” the official said, adding that Moscow has not agreed on the discount yet. “We fear that the maximum discount would be offset by the shipping cost of the crude oil.”

Earlier in a press conference, Malik had claimed that Pakistan would get a 30% discount on Russian crude oil.

The government would import one Russian crude oil ship to test the landed cost as compared to the existing cost of crude being imported from Abu Dhabi National Oil Company (ADNOC) of the United Arab Emirates and Saudi Aramco.

Since Pakistan is facing a US dollar liquidity crunch, it would pay Russia in the currencies of friendly countries that include China, Saudi Arabia, and UAE.

The officials said that the ship carrying Russian crude will be insured by the National Insurance Company Limited (NICL) and Pakistan Reinsurance Company Limited (PakRE).

The State Bank of Pakistan (SBP) which was earlier hesitant to transactions with Russian banks, due to G7 restrictions, has now shown a willingness to talk with the Russian counter bank over a payment mechanism for oil import in three currencies other than dollars.