A Russian delegation is in talks with Pakistan State Oil (PSO) officials in Karachi to finalize a government-to-government crude oil import deal, a Pakistani Energy Ministry official told The News International
MOSCOW (Pakistan Point News / Sputnik - 22nd March, 2023) A Russian delegation is in talks with Pakistan State Oil (PSO) officials in Karachi to finalize a government-to-government crude oil import deal, a Pakistani Energy Ministry official told The News International.
"In case of successful talks, both the state-owned nominated companies will sign the commercial agreement the next day (March 22)," an official who preferred to remain anonymous told the Pakistani news outlet.
The PSO plans to lock the deal at nearly $50 per barrel, which is $10 lower than the price cap imposed by the G7 countries on Russian crude oil, the newspaper noted.
Before signing the agreement, Russia will agree with the PSO all the prerequisites including payment options, shipping prices with premium and insurance costs. Russia may offer a discount to the base price during talks with the technical team of the PSO, the officials said, as quoted by the media outlet.
"We 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. We fear that the maximum discount would be offset by the shipping cost of the crude oil," the ministry official said.
The Pakistani government does not want to disclose the mode of payment for Russian crude oil imports. Whether the oil will be transported by Pakistan National Shipping Corporation or by Russian vessels is also uncertain, and is yet to be decided by the authorities.
"The 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 (Abu Dhabi National Oil Company) and Saudi Aramco. Pakistan has sought a 30 percent discount in Russian crude base price," the official said, as cited by the Pakistani newspaper.
If the Russian oil price is found to be low enough, Pakistan will approve the import of crude oil and may receive two-four shipments a month, the newspaper noted.
Western countries have been seeking ways to limit Russia's income from oil and gas exports, as well as their dependence on Russian fuel, since the country launched its military operation in Ukraine on February 24, 2022. On December 5, the European Union placed a price cap of $60 per barrel on Russian crude oil, and was joined by the G7 nations and Australia. The EU sanctions provide for a price ceiling on Russian refined products starting from February 5, 2023.
In January 2023, Pakistani Petroleum Minister Musadik Malik announced that his country would start to import crude oil from Russia in April after Moscow and Islamabad wrapped up negotiations on supply conditions. Pakistan has also started to develop a Holistic Energy Security Plan, which will be completed by the end of 2023 and include the import of Russian liquefied natural gas, piped gas, and other petroleum products.
