Russian oil flows to Pakistan represent a glimmer of hope for the country, which is thirsty for energy supplies to meet its domestic needs in light of an energy crisis afflicting it, in addition to the possibility of paying for it in currencies other than the US dollar. Islamabad is suffering from a severe crisis due to foreign exchange reserves, which have fallen to less than $10 billion.
In this context, the first shipment of oil coming from Russia arrived at the port of Karachi today, Sunday, June 11 (2023), according to a report published by the “aajenglish” channel on its website.
The shipment of Russian oil to Pakistan comes at a time when the debt-ridden country is desperate to secure its fuel needs at discounted prices, and the world’s fifth-largest population 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 Kepler. For data analysis, it was viewed by the specialized energy platform.
Shipment details
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 inside the port.
The ship succeeded in arriving before the arrival of Cyclone Pebarjoy, which will make landfall next Thursday (June 15), as Radio Pakistan said that local refineries will process the Russian oil shipment.
Another shipment of 500 thousand tons (3 million and 550 thousand 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, Mossadeq Malik, had said last April that his country would buy the first order of Russian crude at a low price, according to 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 in the 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 Qasim Port 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 sold 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.
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