Pakistan Seeks Affordable Russian Oil

In a bid to secure top-quality Russian crude oil at competitive rates, Pakistan is actively negotiating with Russia, aiming for prices below the $60 per barrel benchmark set by the Group of Seven (G7) nations.

The move comes on the heels of Pakistan Refinery Limited (PRL) conducting a successful test-processing of 100,000 tons of URAL crude. Following the positive results, the Pakistani government is eager to expand its imports of Russian fuel, albeit at a rate approximately $35 less than the current international market price, which hovers around $95 per barrel.

Pakistan’s appeal to Russia includes a request for high-quality crudes like SOKOL or Siberian Light Oil, both of which are typically pricier than URAL. However, it appears unlikely that Moscow will readily agree to such a substantial discount of $35 per barrel on these premium-grade crudes.

During the initial phase of testing, PRL was able to produce 10 percent petrol, 60 percent furnace oil, and 10-15 percent diesel from URAL crude. The remaining 15 percent was allocated for other products. Unfortunately, due to an excess of furnace oil, the refinery was compelled to export it at a 25 percent loss.

One notable challenge discovered during URAL crude processing was its high viscosity, necessitating a 10 percent diesel mixture to facilitate flow. This adjustment led to an increase in furnace oil production to 60 percent, while diesel production dipped by 10 percent. Consequently, the net diesel output remained at 10-15 percent. This situation compelled PRL to export 60 percent of the low-grade Russian crude as furnace oil at a loss.

Given these challenges, the Pakistani government is now seeking superior-quality Russian crudes but at a more favorable, below-market rate. It’s worth noting that Brent crude prices have been fluctuating between $93 and $96 per barrel, with the possibility of reaching the $100 mark due to OPEC+ production cuts. Despite these market dynamics, Pakistan is pressing for a monthly cargo of Russian crude at discounted rates to mitigate its pricing concerns.