July 11, 2023
2 mins read

Pak-Russia oil deal faces roadblock

Pakistan and Russia had agreed to form a Special Purpose Vehicle (SPV) to specifically manage the import of oil from Moscow to Islamabad….reports Asian Lite News

The all-important oil deal between Pakistan and Russia has hit a roadblock, as the two nations are unlikely to finalise a long-term supply deal.

Pakistan and Russia had agreed to form a Special Purpose Vehicle (SPV) to specifically manage the import of oil from Moscow to Islamabad.

However, due to the delay in initiating the process by Islamabad, Moscow is now reluctant to enter into a long-term agreement, especially with concessions on oil supply. 

A government source with knowledge of the deal said that both Islamabad and Moscow seem to be clinging to their positions, meaning that inking a long-term agreement may not be possible anymore. 

The expected concern on part of Russia is the discounts it offered to Pakistan.

Russia quotes former India oil prices on the Platts index, which means Russian oil prices will vary with fluctuation on Platts and no permanent discounts would be possible going forward for Pakistan. 

On part of Pakistan, the government is stuck between two formulas for the oil deal, according to sources.

The first option is to set up an SPV with the mandate of oil imports from Russia, signposting state’s involvement in oil purchases.

The second option to allow the oil industry to do commercial deals with Russian firms and will be responsible for profit and loss. 

In a recent test case, Pakistan Refinery Limited (PRL) imported about 1,00,000 tons of crude oil from Russia. 50,000 tons has already been refined while the remaining is yet to be processed. The deal is considered to be a test case to understand the economics of Russian oil.  

Crude oil purchases from the Middle East produces at least 45 per cent of High-Speed Diesel (HSD) and 25 per cent of furnace oil whereas Russian crude oil is expected to produce 32 per cent of HSD and 50 per cent of furnace oil. 

However, the demand of Russian crude oil has gone down considerably in Pakistan because power plants have shifted to Liquefied Natural Gas (LNG).  

Experts say, Pakistan has no market for Russian oil. 

“Pakistan’s refineries can use Russian oil by blending it with Arabian crude. Otherwise, there is no market of Russian oil in Pakistan due to higher volumes of furnace oil produced by that crude,” said business market expert Zahar Bhutta. 

ALSO READ: Russia hails GCC trade ties

Previous Story

NATO to lay path for Ukraine reforms

Next Story

The Mantram at Birla Millennium Art Gallery

Latest from -Top News

‘Kill and Dump’ Haunts Balochistan Again

The latest killings have reignited accusations of extrajudicial executions and the use of counterterrorism laws to cover up custodial deaths in Balochistan….reports Asian Lite News Concerns have deepened across Balochistan following the

‘ASEAN Expands, But Keeps Its Soul’

Malaysian Foreign Minister Mohamad Hasan urged ASEAN to uphold its unity and strategic resolve amid intensifying geopolitical tensions and mounting external pressures…reports Asian Lite News Consensus and inclusivity will remain the cornerstones

Bangladesh bends to beat Trump’s blow

Dhaka seeks compromise as Trump’s 35% tariff looms large over key exports; Washington urges worker protections, factory relocation to US…reports Asian Lite News Bangladesh has opened the second round of critical trade

China seethes as US lands F-35s in PH

As US F-35 jets land in the Philippines for the first time, Manila cements its frontline role in Washington’s power play against rising China….reports Asian Lite News The Philippines is rapidly cementing
Go toTop

Don't Miss

Pak Army soldiers killed in Afghan border firing

In another incident, a Pakistan soldier was killed on Thursday

Economic Crisis Grips Pakistan with No Exit

The total foreign exchange reserves of the bank fell to