By Staff Reporter
ISLAMABAD: Pakistan is in talks to buy a second shipment of discounted Russian crude oil, its petroleum minister said on Wednesday, as the cash-strapped nation seeks to diversify its energy sources and save on foreign exchange reserves.
Musadiq Malik told reporters that the first cargo of 100,000 tons of Russian Urals had been successfully tested at the state-run Pakistan Refinery Limited (PRL), despite some drawbacks such as higher freight and insurance costs, and producing more furnace oil after refining compared with Arabian light oil.
“We are finalizing another cargo,” he said, without disclosing the quantity or the price of the second consignment. He added that there was no scenario under which the country was “not benefiting” from Russian crude.
The first cargo, agreed in April, docked at Karachi port last month and was paid for in yuan, China’s currency. Pakistan got into the deal with Russia in part to save on foreign exchange reserves, which are used mainly on oil imports.
The country has been facing an acute balance of payment crisis, with its central bank reserves barely sufficient to cover a month of controlled imports. It was teetering on the verge of default before securing a $3 billion bailout from International Monetary Fund late last month.
Pakistan’s demand gives Moscow a new outlet to add to growing sales to India and China, as it redirects oil from Western markets because of the Ukraine conflict.
Malik said that a private entity, Pak-Arab Refinery Limited (PARCO) had also been asked to import Russian crude. “We have also requested Parco’s board to consider and import it,” he said.
Energy imports make up the majority of Pakistan’s external payments. Islamabad imported 154,000 barrels per day (bpd) of oil in 2022, around the same as the previous year, data from analytics firm Kpler shows.
The crude was predominantly supplied by the world’s top exporter Saudi Arabia, followed by the United Arab Emirates.
Islamabad is looking for Russian crude to account for one third of total oil imports.
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