By Staff Reporter
ISLAMABAD: The government has sought inputs from refineries on import of crude oil from Russia along with their recommendations for the viability of the option, officials said.
The move aims to cut its ginormous import bill and record fuel prices at the outlets, but the industry is not convinced of any significant gains from Russian imports.
Analysts say since local petroleum prices in Pakistan are linked with the international market (as the country meets 70 percent of its demand through imports), replacing Arabian with Russian crude may not have the desired impact on domestic fuel prices.
The Ministry of Energy has approached four local refineries through official communication for this purpose. The government has asked the refineries to submit their reports on the technical suitability of crude grades to be required by them.
The government also wants the industry to come up with transportation/freight analysis for Russian oil imports in comparison with normal imports from the Middle East, based on cost and benefit as well as payment methodology and existing commitment of upliftment from the Arab Gulf region with respect to term contracts.
Pakistan imports 70 percent of its petrol and 30 percent is refined by the local oil industry from imported crude. Even if the government imports Russian crude and it is refined in Pakistan, the change in local petrol price will not be more than a few rupees.
Analyst Fayaz Hussain at Sherman Securities said the impact of this move would depend on the quantum of discount.
Moreover, Hussain said in view of concerns over the mode of payment because of sanctions on Russian oil, its import would require government to government contract as the private sector was unlikely to deal with the Russian government.
“Importing crude from Russia will not have a major impact on fuel prices at the pump as the government will likely increase duties at import stage,” he surmised and added that however there would be marginal impact on import bill.
Pakistan imports around 65 million barrels of crude oil per annum.
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