Islamabad: The State Minister of Petroleum, Musadik Malik, has confirmed that Pakistan has paid for the imported Russian crude oil from Russia in Chinese currency. The payment was made under a government-to-government agreement, although the specific details of the deal, such as pricing and discounts, were not disclosed.
Refinery Limited (PRL) in Pakistan will be responsible for refining the Russian oil, according to the minister. This purchase is considered a trial run to assess the financial and technical feasibility of the arrangement.
Addressing concerns about the financial viability and the capability of local refineries to process Russian crude, Malik reassured that the refining process would not result in any losses. Various product mixes were evaluated, and the minister expressed confidence in the commercial viability of the venture.
The minister also mentioned that no adjustments were required at the refinery to refine the Russian crude, indicating a seamless transition.
Transportation of the anticipated discounted Russian crude oil has commenced from the vessel to a refinery in the port city, as reported by sources. Out of the 45,000 metric tonnes of crude oil, 3,000 metric tonnes have already been offloaded to Pakistan Refinery Limited (PRL). The entire shipment is expected to be transferred to the refinery tomorrow.
Prime Minister Shehbaz Sharif recently announced the arrival of the cargo in Karachi, marking a significant milestone for Pakistan.
In April, Pakistan placed its first order for discounted Russian crude oil, initiating a new agreement between Islamabad and Moscow. After refining the crude, a test report will be submitted to the government to evaluate its quality, yields, transportation costs, and commercial viability. Upon approval, a long-term government-to-government deal with Russia will be pursued.
By diversifying its sources of oil imports, Pakistan aims to mitigate the impact of rising global prices. Russia, as a major producer of crude oil, has provided discounted prices to Pakistan. The payment for the Russian crude will be made in Chinese Yuan through the Bank of China.
With the arrival of Russian crude at a cost lower than the G7-imposed price cap of $60 per barrel, Pakistan anticipates a positive trajectory for furnace oil costs.
Published in PakWeb, June 12th, 2023.
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