A Russian technical delegation will hold talks today (Tuesday) with Pakistan State Oil (PSO) officials in Karachi, to give final touches to a crude oil import deal at a government-to-government level (GtG).
\n“In case of successful talks, both the state-owned nominated companies will sign the commercial agreement the next day (March 22),” said the official who spoke on the condition of anonymity.
\nPSO has been nominated as the state-owned company on behalf of Pakistan for talks and signing of the Russian crude oil import deal. The Operational Services Center (PSC), which is a state-owned company of Russia, has been nominated for the talks by Moscow.
\nThe PSC delegation arrived in Karachi on Monday.
\nBoth the PSC and PSO may ink the deal, as the delegation from Moscow will hold talks on March 21-22.
\n\u201cThe current price of Brent crude has come down to $73 per barrel whereas the Russian crude oil price remained at $52 in February 2023, which has further lowered between $42-48 in the international market,\u201d sources within the industry told the publication.
\nThey urged Pakistan refineries to purchase Russian oil on their own in compliance with the G7 countries\u2019 regulations. However, the government is trying to secure a GtG deal below the $60\/barrel price cap imposed by G7 countries.
\nUnder the GtG deal, Petroleum Division wants to lock the deal at close to $50\/barrel, $10\/barrel below the cap price. The G7 countries had imposed a price cap on Russian oil in the wake of the war on Ukraine.
\nSome official sources say that Russia wants to confirm if Pakistan really wants to purchase its crude as there is no written direction from Pakistan\u2019s top man to purchase the Russian crude. However, Pakistani officials are exploring options to purchase crude from Moscow under the direction of Pakistan\u2019s prime minister.
\n\u201cSo far Russia has not indicated what discount it will offer.\u201d
\nThe Russian side will finalise with PSO all the prerequisites before inking an agreement that includes the mode of payment, shipping cost with premium, and insurance cost. The officials said that Russia\u2019s PSC may offer a discount on the base price in its talks with the PSO\u2019s technical team.
\nThey added that the shipping of crude oil from Russian ports would take 30 days and an additional per barrel transportation cost would be $10-15\/barrel.
\nThe government does not want to divulge the mode of payment to Russia against the import of crude oil. However, the authorities are weighing their options to either use Pakistan National Shipping Corporation ships for transporting crude from the Russian port or to use the Russian tankers.
\n\u201cWe also have to keep in mind the landed cost of Russian crude as the crude vessel will arrive in 30 days, owing to which per barrel shipping cost would hover at $10-15,\u201d the official said, adding that Moscow has not agreed on the discount yet. \u201cWe fear that the maximum discount would be offset by the shipping cost of the crude oil.\u201d
\nHowever, State Minister for Petroleum Musadik Malik in a televised presser said that Pakistan would get a 30% discount on crude oil prices.\u00a0
\n\u201cOur commercial deal is in the final stages, and by the month of March the entire commercial deal will be negotiated,\u201d he said. \u201cIn April, we will give them the first shipping order. The first cargo of crude oil from Russia will arrive in by the end of April,\u201d the state minister said.
\nThe minister revealed that the country would receive one-third of its crude oil imports from Russia at a concessional rate \u201cthe impact of which will be translated to the people.\u201d
\n\u201cThe first crude oil vessel from Russia will arrive at the end of next month of April as a test cargo to assess the landed cost of crude as compared to the cargo Pakistan gets from ADNOC and Saudi Aramco. Pakistan has sought a 30% discount in Russian crude base price.\u201d
\nIn case, the test ship\u2019s cost is found low enough to bring down the prices of petroleum products, Pakistan would give a green signal for the import of Russian oil in a month which may be 2-4 cargos.
\nSince Pakistan is facing a US dollar liquidity crunch, it would pay Russia in the currencies of friendly countries that include China, Saudi Arabia, and UAE. The officials said that the ship carrying Russian crude will have the NICL’s (National Insurance Company Limited) insurance and Pakistan Reinsurance Company Limited (PakRE) will reinsure the asset (ship with crude oil).
\nThe State Bank of Pakistan, which earlier showed hesitance for any transaction with Russian banks keeping in view the G7 regulations and the US and EU countries, has now shown a willingness to talk with the Russian counter bank over a payment mechanism for oil import in three currencies other than dollars.<\/p>\n","protected":false},"excerpt":{"rendered":"
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