1 Lac Ton Russian oil to arrive in June

May 25, 2023

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Russian Oil Shipment will arrive Pakistan port carrying 100,000 tons in first week of June. The Russian oil is contracted at Discounted price compared to market price. This import is a crucial component of the government’s energy security plan.

This will be the trial shipment of Russian Crude Oil and will be sent to local refineries for Fuel Conversion. Based on the results, Government will decide on future purchases of Russian Oil.

During a private meeting with the media, Musadik Malik, the State Minister for Energy, shared details about the new refinery policy. The policy aims to encourage investments in new refineries, specifically those focused on shallow, deep conversion, and ultra-deep conversion processes for up to 20 years.

“The cargo, consisting of 100,000 tons of Urals crude oil, will reach the Oman port on May 26-27. From there, the oil will be transported to Pakistan in smaller vessels within seven to 10 days,” the minister explained. He assured that while there would be some increase in transportation costs, it would not be significant.

Although the minister did not disclose the exact discounted price or payment method for the Russian oil, he hinted that the payment was made through a banking channel. The heavy Urals crude oil will then be refined at the Parco refinery and mixed with light Arabian oil to reduce the overall price.

Furthermore, the minister revealed that the new refinery policy would accelerate the necessary energy growth crucial for economic development. He emphasized that a 1% increase in GDP requires a 1.5 to 2% growth in the energy sector, while a 5% GDP growth necessitates a 7 to 10% increase in the energy sector. Achieving these goals would not be possible without investments in refineries, as well as oil and gas exploration and production.

Under the new refinery policy, refineries with a capacity of 300,000 tons will receive incentives for 20 years, while those with capacities below 300,000 tons will receive incentives for 10 years. However, it will be mandatory for the financial closure of these projects to occur within five years.

Import duties on refinery equipment for refineries with capacities of 300,000 tons or more will be set at 7.5% for MS (Motor Spirit) and diesel for 20 years. The same incentives will apply for refineries with capacities below 300,000 tons, but only for 10 years. Both types of refineries will be eligible for incentives under the special economic zone (SEZ) laws.

The minister projected that by 2030, the consumption of petrol and diesel would increase from 20 million to 33 million units. Currently, local refineries produce around 10 to 11 million units, with the rest being imported. He added that the global premium on diesel is up to $18 due to high demand.