A Russian delegation is scheduled to arrive in Pakistan today to resolve the deadlock in the crude oil import agreement. The issue arose due to differences over a long-term oil supply deal between Pakistan Refinery Limited and Russian officials during negotiations at the Russian Energy Forum in October.
The deadlock primarily stemmed from the Russian authorities’ reluctance to commit to a long-term agreement within the price cap set by the European Union and the United States amidst the Ukraine conflict, which stands at $60 per barrel for Russian oil. Pakistan is adamant about not violating this price cap, as it could result in potential US sanctions.
Earlier, the Pakistani government had decided to ink a long-term contract with Russia at the $60 per barrel level in October. Under a commercial arrangement, the trading company Pakistan Refinery Limited (PRL) was permitted to engage in the contract. PRL has already imported 100,000 tonnes of Russian oil, yielding profitable results.
In terms of benefits, experts suggest that importing oil from Russia could be advantageous for Pakistan. Previous trial orders showed a $7 per barrel cost reduction compared to other sources, resulting in a higher yield of high-speed diesel and furnace oil. Initially, PRL blended 50% Russian oil with an equal amount of Arabian oil but later shifted to a 35% Russian oil and 65% Arabian oil mix, yielding improved results and reduced furnace oil production.
While Pakistan remains reliant on Arabian oil, the collaboration with Russia presents a promising opportunity. PRL is actively working to augment its production capacity from 50,000 barrels per day to 100,000 barrels per day and has awarded a construction contract for this purpose.
