Pakistan getting no ‘special discount’ on oil purchase, says Russia

ISLAMABAD: Russia’s Energy Minister Nikolai Shulginov has ruled out any sort of ‘special discount’ for Pakistan on oil purchase, saying that “it is the same as for other buyers”, ARY News reported on Sunday.

“Oil deliveries to Pakistan have begun. There is no special discount; for Pakistan, it is the same as for other buyers,” Energy Minister Nikolai Shulginov told journalists on the sidelines of an international economic conference in St. Petersburg.

The Russian minister confirmed that it has started exporting oil to Pakistan and that it had agreed to accept Chinese currency as payment, while clarifying that Islamabad did not receive any special discounts on the purchase deal.

When asked if Pakistan was paying Russia in Chinese currency, Nikolai Shulginov said: “We agreed that the payment would be made in the currencies of friendly countries”.

He also confirmed that the issue of barter supplies was also discussed, “but no decision has been made yet.”

The minister said that the two countries had not yet reached an understanding on prices for the export of liquefied natural gas to Pakistan. He noted that “the discussion is about long-term contracts, but so far, we are talking about spot supplies, and spot gas prices are now high”.

Earlier, Prime Minister (PM) Shehbaz Sharif announced last week that the first “Russian discounted crude oil cargo” had arrived and offloaded at the port in the southern city of Karachi.

I have fulfilled another of my promises to the nation. Glad to announce that the first Russian discounted crude oil cargo has arrived in Karachi and will begin oil discharge tomorrow.

Today is a transformative day. We are moving one step at a time toward prosperity, economic…

— Shehbaz Sharif (@CMShehbaz) June 11, 2023

‘Russian crude shipment paid in Chinese currency’

State Minister for Petroleum Musadik Malik said that Pakistan paid for its first government-to-government import of Russian crude in Chinese currency.

Malik, talking to Reuters by phone, did not disclose the commercial details of the deal, including pricing or the discount that Pakistan received, but said the payment was made in Chinese currency.

He said the purchase, Pakistan’s first government-to-government (G2G) deal with Russia, consisted of 100,000 tonnes, of which 45,000 tonnes had docked at Karachi port and the rest was on its way. The purchase was made back in April.

Pakistan’s Refinery Limited (PRL) will initially refine the Russian crude, the minister said. He had earlier referred to the purchase of the shipment as a trial run to judge financial and technical feasibility.

“We’ve run iterations of various product mixes, and in no scenario will the refining of this crude make a loss,” Malik said, adding, “We are very sure it will be commercially viable.”

Pakistan oil purchase

Pakistan imports 70 percent of its crude oil, which the PRL, National Refinery Limited, Pak Arab Refinery Limited, and Byco Petroleum refine. The remaining 30% is locally produced and refined by the local refineries, including Attock Refinery Limited.

The move to import oil from Russia comes as Pakistan is looking to diversify its sources of oil imports amid rising global prices.

Energy imports make up the majority of the Pakistan’s external payments. Islamabad imported 154,000 bpd of oil in 2022, around steady with the previous year, data from analytics firm Kpler showed.

Despite being a long-standing Western ally and the arch-rival of neighbouring India, which historically is closer to Moscow, analysts say the crude deal also presents a new avenue for Pakistan at a time when its financing needs are great.