Govt Gets Mixed Response from Refineries on Russian Crude Oil

The government has received responses from a number of local refineries for buying oil from Russia after it invited suggestions for this purpose.

The Ministry of Energy (Power Division) had asked the Managing Directors of the key local oil refineries of the country for a detailed analysis regarding the option of importing crude oil from Russia, along with recommendations.

The ministry has so far received responses from Pak Arab Refinery Limited (PARCO), National Refinery Limited (NRL), and Pakistan Refinery Ltd (PRL).

PARCO’s response

In its response PARCO said that its maximum refining capacity for the Russian crude is 70000MT per month (15 to 30 percent), however, in order to uplift Russian Crude on regular basis, the company has to reduce the contractual volumes, from Middle-Eastern countries, in the medium to long term.

It said that the Russian crude grades are technically suitable for processing at Mid-Country Refinery (MCR) in the range of 15-30 percent of the crude oil blend by replacing some of the existing grades.

It further said that their Crude Oil Transportation Carrier (PNSC) is not permitted to call on Russian ports, therefore, alternate transportation arrangements would be required through a supplier or trader. The current transportation freight for import from Russian Ports is estimated in the range of $3.0-3.5 million compared to the current freight of $0.8-1.0 from Middle-Eastern ports. The sea voyage from Black Sea Ports would also be around 16-25 days compared to 4-5 days from Middle-Eastern Ports.

It further said that payment in US Dollars may not be acceptable to Russian companies. Therefore, a payment mechanism will have to be devised between Pakistan and Russia and local banks will need to support payment in Rubbles.

National Refinery Limited’s Response

The National Refinery Limited while refusing the import of Russian Crude oil has said that the company has a long-term agreement with Saudi Aramco and maintaining the current appetite/feed of lube refineries it may not be able to process any other crude unless the techno/economic study suggests otherwise.

It added that NRL has lube refineries and the configuration of the refineries restricts the list of feedstock. We have been from time to time unsuccessfully trying to identify alternate feedstock to Arabian light crude, which suits the refinery configuration, the response added.

Pakistan Refinery Limited’s Response

Pakistan Refinery Limited while pointing out various hurdles in the import of Russian Crude has said that presently all Pakistani banks are not willing to open Letters of Credits (LCs) for Russian Origin crudes.

It said that the transportation cost of the Russian Crude will be 433 percent higher, while voyage time is four times higher than the Middle-Eastern import of oil.

It further said that detailed assays and samples are needed to evaluate the physical and chemical properties of these crudes and their product streams. PRL’s current preference is Sokol crude. However, a final decision on the procurement of the subject crude will be made after evaluating the economic viability in comparison with crudes that are currently being processed at the refinery.



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