KARACHI: Pakistan is expected to suspend import of crude oil from Russia after the refining process yielded more furnace oil than petrol, a setback as the country seeks to cut domestic fuel prices.
Pakistan Refinery Limited (PRL) has raised concerns about its capacity to process more quantities of Russian crude oil. This has also been hampered by a shortage of foreign currency and limitations at the country’s refineries and ports.
According to reports, the PRL has refused to process more Russian oil, as it yielded less petrol with 20% more furnace oil than Arabian crude oil.
Russian oil yields less kerosene and jet fuel and there has no plans to upgrade capacity. This suggests the benefits of importing Russian crude oil are limited which is not beneficial for the country.
Pakistan received two shipments of crude oil from Russia which arrived at the Karachi Port on June 11 and 26, carrying 45,000 and 56,000 metric tonnes of oil respectively. The PRL earlier said it required two months to process the crude oil.
Local refineries cannot extract as much petrol and diesel out of Urals crude from Russia as they produce from Middle Eastern crude. There is also no significant savings for consumers as it leads to just Re1 per litre discount which translates to a reduced cost of 20 paisa per litre of petrol.
The issue of importing oil from Russia has gained great political and diplomatic importance over the past year. Pakistan has not disclosed the term of the deal but maintained that the payments were made in the Chinese currency yuan.
The transportation costs for Russian crude are higher than for Middle Eastern crudes due to longer distance traveled and since Pakistan’s ports cannot handle the large vessels departing Russia.
Urals crude has to be transferred from a supertanker to smaller ships, known as a lightering operation, in Oman before heading to Pakistan, unlike direct shipments from the Middle East.
PRL CEO Zahid Mir last month said that the refinery would need around two months to fully process its first batch of 100,000 tonnes (730,000 barrels) of Urals crude.
This oil needs to be mixed with Middle Eastern crude to balance the high fuel oil output from the Russian variant. “Our optimum processing solution is to blend Urals with Middle Eastern imported crude while not exceeding 50pc Ural in the blend,” Mir told a news agency.
