Russian crude oil purchased in Chinese Yuan, confirms Musadik Malik

ISLAMABAD: Pakistan has paid for the crude oil imported from Russia, under a government-to-government agreement, in Chinese currency, confirmed State Minister of Petroleum Musadik Malik.

The federal minister confirmed the modality of payment while talking to Reuters by phone. However, he did not disclose the commercial details of the deal, including pricing or the discount that Pakistan received.

Pakistan's Refinery Limited (PRL) will initially refine the Russian oil, the minister said. He had earlier referred to the purchase of the shipment as a trial run to judge financial and technical feasibility.

Malik also played down concerns around the financial viability and concerns about the ability of local refineries to process Russian crude as Pakistan historically imports the commodity from the Middle East.

"We've run iterations of various product mixes, and in no scenario will the refining of this crude make a loss," he said. 

"We are very sure it will be commercially viable," he further added.

"No adjustments [were] needed at the refinery to refine the Russian crude," the minister told Reuters.

Earlier today, sources had told Geo News that local authorities have begun transporting the much-anticipated discounted Russian crude oil from the vessel to a refinery in the port city.

People in the facility said that of the 45,000 metric tonnes of crude oil, 3,000 metric tonnes had been offloaded from the ship to Pakistan Refinery Limited (PRL).

They added that the crude oil, which took more than 20 days to reach the country, will be entirely shifted to the refinery tomorrow. The vessel reached the Pakistani waters from the Port of Oman.

Prime Minister Shehbaz Sharif announced Sunday that the cargo had reached Karachi — a first for Pakistan.

In April, Pakistan placed its first order for discounted Russian crude oil under a new deal signed between Islamabad and Moscow.

The News reported that after refining the crude, a test report would be submitted to the government on the quality, yields, transportation cost, and commercial viability of the crude oil.

Following the approval of the report, the government will go for a long-term government-to-government (gtg) deal with Russia.

The test cargo will also help the government assess the transportation costs, refining costs, and margins for refineries and also to know how smooth the payment mechanism that has been carved out is based on the Yuan currency.

Pakistan imports 70% of its crude oil, which the PRL, National Refinery Limited, Pak Arab Refinery Limited, and Byco Petroleum refine.

The remaining 30% is locally produced and refined by the local refineries, including Attock Refinery Limited.

The move to import oil from Russia comes as Pakistan is looking to diversify its sources of oil imports amid rising global prices.

Russia is a major producer of crude oil and has offered the country discounted oil prices. The payment for the Russian crude will be made in Yuan through the Bank of China.

The Russian crude is reported to have come to Pakistan at $50-52 per barrel against the price cap of $60 per barrel imposed by the G7 countries, so at this cost, the furnace oil cost may go in a positive trajectory.