Pakistan has received a shipment of crude oil from Russia through the seagoing tankers. According to several media outlets including the Reuters and OilPrice, the delivery is part of a G2G (government-to-government) contract.
Pakistan has made the payment in the Chinese currency Yuan (RMB), told the Petroleum Minister of Pakistan, Musadik Malik, speaking to Reuters by telephone on 12 June 2023.
This is the first time Pakistan has purchased oil from Russia under a G2G deal. The payment in Chinese Yuan instead of the US Dollar is also unprecedented.
The total deal is for 100,000 tonnes, of which 45,000 tonnes had docked at Karachi port and the rest is on its way. Pakistan made the purchase back in April this year.
The oil is Urals, a lighter grade. The deal was made at an undisclosed but discounted price.
This is not a one-off deal. According to the reports, Pakistan will continue receiving oil from Russia under this format and process it at the flagship Pakistan Refinery Limited (PRL) for consumption in the local market.
“We’ve run iterations of various product mixes, and in no scenario will the refining of this crude make a loss,” Malik told Reuters, adding: “We are very sure it will be commercially viable.”
It will be blended with around 60-70% Arabian light crude for refining, he said, adding, “No adjustments (were) needed at the refinery to refine the Russian crude.”
“We’re looking to target one-third of our total oil imports at the Russian crude,” the minister said.
The decision to pay in Chinese currency instead of the traditional U.S. dollar comes after Russia last year said it will no longer accept the American currency as payment for its energy commodities but will instead switch to Chinese and Emirati currencies, reports OilPrice.
Since the start of the Ukraine conflict, the Russian Urals has been trading USD 15-20 below the Brent in the open market. /// nCa, 13 June 2023
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