ISLAMABAD: According to sources, the Petroleum Division is attempting to buy Russian crude oil for roughly $50 per barrel, at least $10 per barrel less than the price cap set by the G7 nations on the valuable commodity being seized from Russia as a result of its conflict with Ukraine.
Presently, the price per barrel of crude oil traded internationally is $82.78.
Before signing the agreement with Pakistan, Moscow is more interested in fulfilling all the conditions, including the method of payment, the shipment cost with premium, and the cost of insurance, according to officials involved in the virtual negotiations with Moscow.
Under the condition of anonymity, officials told the publication that after the prerequisites are completed, Russia would answer regarding the basic price discount. They also mentioned that it would take 30 days for crude oil to be shipped from Russian ports, which would result in a $10–$15 per barrel price rise for transportation.
Moscow and Islamabad are having productive discussions in the hopes of reaching a government-to-government agreement on the import of Russian crude by the end of March.
In response to a query, they stated that the government had made the decision not to disclose the method of payment to Russia for the import of crude oil. But authorities are debating whether to transfer the petroleum using ships from the Pakistan National Shipping Company (PNSC) or Russian tankers.
While the Russian crude tanker will arrive in 30 days, “we also have to keep in mind the landing cost of Russian crude, which would result in per barrel shipping costs that would hover around $10-15,” the person said, adding that Moscow has not yet agreed to the reduction. “We worry that the crude oil shipping costs will offset the greatest discount.”
Yet, in a news conference, State Minister Musadik Malik asserted that Pakistan will receive a 30% discount on Russian crude oil.
The government will import one ship of Russian crude oil to compare the landed cost to the current cost of crude imported from Saudi Aramco and Abu Dhabi National Oil Corporation (ADNOC) of the United Arab Emirates.
The secretary of the petroleum division is in Karachi to further discuss the import of Russian crude oil for processing into finished products with the top executives of Pak-Arab Refinery Company Limited (PARCO), Pakistan State Oil (PSO), Pakistan Refinery Limited (PRL), and other refineries.
Pakistan will approve Russian oil cargoes in a month if the cost of the test ship is low enough to lower the cost of fuel, oil, and lubricants.
Pakistan would pay Russia in the currencies of friendly nations such as China, Saudi Arabia, and the United Arab Emirates because it is experiencing a US dollar liquidity crisis.
The National Insurance Company Limited (NICL) and Pakistan Reinsurance Company Limited would insure the ship carrying Russian crude, according to the officials (PakRE).
Due to G7 constraints, the State Bank of Pakistan (SBP), which was previously reticent to conduct business with Russian banks, has now shown a willingness to speak with the Russian counterpart bank about a payment system for oil imports in three different currencies.