Pakistan is aiming to acquire top-notch Russian crude oil, but they desireit at a price lower than the $60 per barrel limit set by the Group of Seven(G7) nations. After successfully test-processing an initial shipment of100,000 tons of URAL crude by Pakistan Refinery Limited (PRL), thegovernment is keen to import Russian fuel. They are seeking a rate that isapproximately $35 less than the current international price of around $95per barrel, as reported by local media today.
Pakistan has already made a request to Russia for the supply ofhigh-quality crudes like SOKOL or Siberian Light Oil, which are moreexpensive than URAL. However, it’s unlikely that Moscow will provide thesetop-grade crudes at such a significant discount of $35 per barrel.
During the pilot phase, PRL was able to produce 10 percent petrol, 60percent furnace oil, and 10-15 percent diesel from URAL crude, with theremaining 15 percent allocated to other products. Unfortunately, due to anexcess of furnace oil, the refinery had to export it at a 25 percent loss.
The issue arises from the high viscosity of furnace oil produced from URALcrude, which necessitates a 10 percent diesel mixture to facilitate flow.Consequently, furnace oil production increases to 60 percent while dieselproduction decreases by 10 percent. This results in a net diesel output of10-15 percent, meaning that out of every 100,000 tons of low-grade Russiancrude, PRL must export 60 percent as furnace oil at a loss. Therefore, thegovernment is in search of better-quality Russian crudes, but they wantthem at a price lower than the market rate.
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It’s worth noting that Brent crude remains in the $93-96 per barrel rangeand could potentially reach $100 due to OPEC+ production cuts. Despitethis, Pakistan is looking to secure one shipment of Russian crude per monthat discounted rates.