Home » Russian Oil Imports Face Port, Refinery, Currency Constraints

Russian Oil Imports Face Port, Refinery, Currency Constraints

by admin
0 comment 110 views

Despite attractive prices, Pakistan is facing challenges in meeting its target for Russian crude to make up two-thirds of its oil imports. The cash-strapped nation became Russia’s latest customer to take advantage of discounted crude that had been banned from European markets due to Russia’s conflict with Ukraine. 

While Pakistan targets 100,000 bpd of imports from Russia to lower its import bill, the benefits are offset by increased shipping costs and lower-quality refined products compared to those produced with crude from its main suppliers, Saudi Arabia and the United Arab Emirates. 


Another hurdle is the shortage of Chinese yuan currency to pay for Russian crude, as Pakistan needs the yuan for trade with China, its top trade partner. Pakistan paid for its first Russian crude cargo in yuan, but using a barter deal with Russia might be more suitable to preserve its yuan reserves for other trade purposes. 


Port and refinery constraints also pose challenges. Transportation costs for Russian crude are higher due to the longer distance traveled, and Pakistan’s ports cannot handle large vessels departing from Russia directly. Urals crude had to be transferred from a supertanker to smaller ships in Oman before heading to Pakistan. 


Moreover, Pakistan’s refineries cannot extract as much gasoline and diesel from Urals crude as they do from Saudi and UAE crudes. It will take Pakistan Refinery Ltd. (PRL) at least two months to fully process its first cargo of Urals crude, as it needs to be blended with Middle East crude to offset the high output of fuel oil from Russian oil. 


Given these challenges, Pakistan’s liquidity issues and technical limitations are expected to limit its appetite for Russian crude, and it is unlikely that Russian imports into Pakistan will grow significantly beyond one cargo per month. 

You may also like

Leave a Comment