Russian oil to be marginally cheaper by Rs1-2 per litre: report

ISLAMABAD: Pakistan has imported Russian oil but the price of petroleum will not be much cheaper per litre than already available in Pakistan, despite the government’s great aspirations.

According to reports, Pakistan will gain from Russian crude oil to the tune of $7-8 million for every 100,000 tonnes, as opposed to Middle Eastern oil. For the final customer, this corresponds to a reduction of just Rs. 1.30 per litre.

The prospects of cost reductions from cheap Russian oil have been dashed, according to economist Abdul Rehman, due to higher than anticipated furnace oil output (60% compared to an estimated 40-50%). In order to benefit from Russian crude, Pakistan requires a deep conversion refinery, which will need at least 4-5 years to build.

It was further reported that if National Refinery Limited (NRL), Pakistan Refinery Limited (PRL), and PARCO processed the crude oil, the discount for end users might rise to Rs1.60 per lite of petrol.

The final benefit for the customer is inadequate given the government’s high expectations for Russian crude oil, which is being processed by PRL.

First Russian Cargo Ship in Pakistan

The first Russian ship carrying oil reached Karachi on June 13. According to a Karachi port spokesperson, a 183-meter-long vessel with 45,142 metric tons of Russian Oil arrived at the port.

For the past year or two, Russian oil has been making headlines in Pakistan. The first declaration was made by the previous PTI administration when it sent a formal letter to Moscow asking for reduced oil prices.

However, the project was put off for more than a year after that administration was overthrown. Then there was a discussion about whether Pakistani refineries could process Russian crude oil, followed by concerns about its cost and if it would lower petrol costs in the nation.