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Thursday Jun 30 2022
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Importing oil from Russia would be expensive: sources

A general view shows the Taneco refinery complex, which is part of Russias oil producer Tatneft group of companies, in Nizhnekamsk, in the Republic of Tatarstan, Russia, July 26, 2017. — Reuters/File
A general view shows the Taneco refinery complex, which is part of Russia's oil producer Tatneft group of companies, in Nizhnekamsk, in the Republic of Tatarstan, Russia, July 26, 2017. — Reuters/File

  • Sources clarify refining crude oil in Pakistan would not be a problem.
  • Reports note costs would rise because of high transportation charges.
  • Refineries says Russian crude oil is acceptable to Pakistan’s refineries.


ISLAMABAD: Following the news regarding the government seeking analysis from refineries regarding the possibility of importing crude oil from Russia, well-informed sources in the petroleum division stated that Russian oil would be expensive for Pakistan, Geo News reported Thursday.

Sources clarified that refining crude oil in Pakistan would not be a problem; however, costs would rise because of high transportation charges.

It was revealed that importing crude oil from Russia would take up to 30 days. Moreover, the country has to analyse whether oil can be imported from Russia or not as sanctions on Russia can impede imports.

The sources also revealed that the Ministry of Foreign Affairs has inquired about the possibility of importing crude oil from Russia.

A day earlier, it was learnt that the Ministry of Energy had asked industrial experts to furnish analysis for importing oil from Russia, as the country sought to procure the commodity at a cheaper rate amid a financial crunch.

In a letter written to the managing directors of Pak-Arab Refinery, National Refinery, Pakistan Refinery, and Byco Petroleum, the ministry directed them to submit the following recommendations:

  • Technical sustainability of crude grades in view of each refinery configuration and yield (Vol%).
  • Quantity and grade of the subject crude to be required by the refinery.
  • Transportation/freight analysis for imports from Russia in comparison with normal imports from the Middle East based on cost and benefit analysis.
  • Payment methodology
  • Existing commitment to upliftment from the Arab Gulf region with respect to term contracts.

Reports from the refineries stated that the Russian crude oil is acceptable to Pakistan’s refineries but there are many ifs and buts including the issue of how to import it amid sanctions imposed on Russia in the wake of its invasion of Ukraine.

The News reported that for Russia’s crude oil import, the government needs to enter into a G2G (government-to-government) commercial contract with a mode of payment that ensures no impact of economic curbs on Moscow.

A senior official at the Petroleum Division told the publication that four refineries — PARCO, Byco Petroleum, Pakistan Refinery, and National Refinery — submitted their response to the government letter written on June 27, 2022, to they seeking their input till June 28 on five issues.

These issues included:

  • Payment methodology.
  • Technical suitability of crude grade in view of each configuration and yield in terms of percentage of volume.
  • Quantity and grade of the subject crude to be required by the refinery.
  • Transportation and freight analysis for imports from Russia in comparison with normal imports from the Middle East based on cost and benefit analysis and existing commitment of upliftment from the Arab Gulf region with respect to term contracts.

The official said: “The Pak-Arab Refinery says it can utilise 15-30% Russian crude oil by blending it with the crude oil it imports from the UAE and Saudi Arabia for refining purposes. Byco says Russian crude oil specifications vary from field to field and most of it is acceptable except Ural crude oil, which has a large percentage of sulphur. In short, most of the Russian crude oil is acceptable.”

He further added that the refineries, which we're currently facing difficulties in getting their LCs (letters of credit) confirmed by foreign banks, could not import Russian crude. Pakistani commercial banks through which refineries open LCs for the import of crude oil from Saudi Arabia and the UAE are not willing to import the Russian crude oil in the presence of sanctions against Russia.