The first shipment of Russian oil to Pakistan was a glimmer of hope for the Islamabad government, which seeks to reduce the energy bill in light of the country’s suffering from a stifling economic crisis, as a result of which foreign exchange reserves fell to less than $10 billion, and its national currency underwent a significant devaluation.
In this context, Pakistani Oil Minister Mussadeq Malik said that his country paid the value of its first imports of Russian crude in Chinese currency, in a major shift in the export payment policy that is dominated by the US dollar.
The first shipment of Russian oil to Pakistan, arranged under a new agreement between Islamabad and Moscow, arrived in Karachi on Sunday, June 11 (2023) and is currently unloading at the port.
Shipment details
The Russian oil shipment to Pakistan comes at a time when the debt-ridden country desperately needs to secure its fuel needs at discounted prices, and the world’s fifth-most populous country is seeking to seize the opportunity of Russian discounts on energy supplies, in the wake of the Russia-Ukraine war.
Pakistan imports 84% of its oil needs from abroad, mainly from Saudi Arabia and the UAE, as it has friendly and political relations, in addition to its relative geographical proximity and transportation through the Strait of Hormuz. It also imported 154 billion barrels of oil during the past year (2022), according to a report by the company. Kepler data analysis, seen by the specialized energy platform.
A ship carrying 45 thousand and 142 tons of Russian oil to Pakistan, equivalent to 320.5 thousand barrels, docked at Berth 2 in the port of Karachi, according to sources from inside the port, according to a report published by the “Aajenglish” channel on its website. mail.
The ship succeeded in arriving before Cyclone Pebarjoy, which will make landfall next Thursday (June 15), as Radio Pakistan said that local refineries will process the Russian oil shipment.
Pakistan’s oil minister did not disclose commercial details of the deal, including pricing or the discount Pakistan received, Reuters reported.
Malik said, “We repeated different mixtures of products, and refining Russian crude in any scenario will not lead to a loss,” adding, “We are sure that it will be commercially viable.”
The Pakistani oil minister had confirmed in previous statements that his country would get a 30% discount on Russian crude oil, as Islamabad raised during the talks with Moscow its desire to obtain a discount of more than 20 dollars for a barrel of Russian oil. You want to buy Russian oil at around $50 a barrel.
Shipments are on the way
Another shipment of 500,000 tons (3,550,000 barrels) is expected to arrive in Karachi next week.
Prime Minister Shahbaz Sharif praised the move, saying: “I am pleased to announce the arrival of the first shipment of Russian oil to Pakistan, which is low-cost crude, and the oil will start draining tomorrow.”
He added, “Today is a turning point. We are moving towards prosperity, economic growth, energy security and affordability.”
The Minister of State for Oil in Pakistan, Mussadeq Malik, said last April that his country would buy the first order of Russian crude at a low price, according to the data seen by the specialized energy platform.
Malik added, “We have reached several agreements with Russia, and Pakistan will submit a request to purchase the first shipment next month, but the arrival of the oil shipment to Pakistan will take some time…between 26 and 27 days.”
Malik visited Russia last year (2022) to buy oil and gas supplies at discounted prices, and Moscow agreed in principle to supply Islamabad with oil, diesel and gasoline at discounted prices.
Small shipments via Oman
At the end of last May, the details of the shipment were revealed, as reports said that the volume of the first Russian oil flows to Pakistan will amount to about 750,000 barrels of Urals crude, according to government sources.
Pakistan will receive the shipment through small shipments in early June, according to the S&P Global platform.
The two countries agreed that the Russian shipment would first arrive at a port in the Sultanate of Oman last May, then Islamabad would transfer it in the form of small shipments to Port Qasim in Karachi during the first half of June, according to the S&P Global report.
It was necessary to transport the Russian crude to Oman first, according to Oil Minister Mossadeq Malik.
Refineries in southern Pakistan can process a maximum of 500,000 tons of oil, and Pakistani refineries cannot process more than two types of Russian crude oil.
Strong cuts
It is possible that Pakistan bought Russian crude at a price of $20 per barrel less than dated Brent, with the possibility of payment in non-dollar currencies.
Platts, a subsidiary of S&P Global Commodity Insights, estimated the price of Urals crude via ship-on-board sales in the Russian port of Primorsk at $51.32 per barrel on May 26.
While the price of Brent crude dated on the same day was $76.43 per barrel, according to S&P Global data.
In theory, those strong discounts could save Pakistan about $1 billion, given the West’s $60-a-barrel price ceiling and assuming some shipments of Russian oil products can be bought at discounts of 30 percent or more.
* This news was updated on June 12, after the statements of the Pakistani Oil Minister, which revealed more details.
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