Pakistan is negotiating a second shipment of discounted Russian crude oil, according to Petroleum Minister Musadik Malik, noting the success of a previous arrangement in assisting the cash-strapped country.
According to Malik, there is no scenario in which the country is “not benefiting” from Russian crude.
“We’re finishing another shipment,” he said.
Malik stated that the first shipment of 100,000 tonnes of Russian Urals had been successfully tested at the state-owned Pakistan Refinery Ltd (PRL), despite constraints such as higher freight and insurance costs and producing more furnace oil after refining than Arabian light oil.
“It will still benefit us,” he added of Russian crude. He did not reveal how much oil was being discussed for the second shipment. Pakistan has also not disclosed the price or discount for the initial shipment.
Pakistan entered into the Russian agreement in part to economize on foreign exchange reserves, which are primarily used for oil imports.
The country has been experiencing a severe balance-of-payments crisis, with the State Bank of Pakistan’s reserves barely covering a month’s worth of restricted imports.
Pakistan’s need adds to Moscow’s expanding sales to India and China as it divert oil from Western markets due to the Ukraine crisis.
Despite being a long-standing Western friend and arch-rival of neighbouring India, which has traditionally been closer to Moscow, analysts say the discounted crude gives a chance for Pakistan during a period of financial crisis.
Pak-Arab Refinery Ltd (PARCO), according to Malik, has also been ordered to acquire Russian crude. “We have also requested that PARCO’s board of directors consider and import it,” he added.
The majority of Pakistan’s external payments are made up of energy imports. According to statistics from analytics firm Kpler, Islamabad imported 154,000 barrels per day (bpd) of oil in 2022, around the same as the previous year.
Saudi Arabia, the world’s largest exporter, supplied the majority of the crude, followed by the United Arab Emirates.
Pakistan expects Russian crude to account for one-third of total oil imports.