Pakistan negotiating second cargo of discounted Russian crude

Russian oil cargo Pure Point anchored at port in Karachi

Islamabad: Pakistan is negotiating to buy a second shipment of discounted Russian crude oil, its petroleum minister said on Wednesday, highlighting the success of a first deal in helping the cash-starved nation.

Musadiq Malik told reporters there was no scenario under which the country was “not benefiting” from Russian crude.

“We are finalising another cargo,” he said.

Malik said the first cargo of 100,000 tons of Russian Urals had been successfully tested at the state run Pakistan Refinery Limited (PRL), despite limitations such as higher freight and insurance costs, and producing more furnace oil after refining compared with Arabian light oil.

“It will still benefit us,” he said of the Russian oil. He did not disclose the quantity of oil under discussion for the second consignment. Pakistan has also not given details on the price or discount of the first shipment.

The first cargo, agreed in April, docked at Karachi port last month and was paid for in China’s currency.

Pakistan got into Russian the deal in part to save on foreign exchange reserves, which are used mainly on oil imports.

The country has been facing an acute balance of payment crisis, with its central bank reserves barely sufficient to cover a month of controlled imports. It was teetering on the verge of default before securing a $3 billion bailout from International Monetary Fund late last month.

OPPORTUNITY
Pakistan’s demand gives Moscow a new outlet to add to growing sales to India and China, as it redirects oil from Western markets because of the Ukraine conflict.

Despite being a long-standing Western ally and the arch-rival of neighbouring India, which historically is closer to Moscow, analysts say the discounted crude presents an opportunity for Pakistan at a time of financial stress.

Malik said private entity Pak-Arab Refinery Limited (PARCO) had also been asked to import Russian crude. “We have also requested PARCO’s board to consider and import it,” he said.

Energy imports make up the majority of Pakistan’s external payments. Islamabad imported 154,000 barrels per day (bpd) of oil in 2022, around the same as the previous year, data from analytics firm Kpler shows.

The crude was predominantly supplied by the world’s top exporter Saudi Arabia, followed by the United Arab Emirates.

Islamabad is looking for Russian crude to account for one third of total oil imports.