The use of Russian crude oil and its impact on petroleum prices in Pakistan have been discussed in a briefing to the caretaker Prime Minister Anwaar-ul-Haq Kakar. The results stated that the Pakistani public can be given a relief of only Rs. 1 on the imported Russian crude oil.

Benefit from Russian Crude

The Petroleum Division explained that the benefit of using Russian crude in Pakistan’s fuel production is quite limited, amounting to only Rs. 1 per liter for both petrol and diesel.

Importing Russian crude comes with its own set of challenges, including a lengthy transportation process of 30-36 days. Moreover, 60 percent of furnace oil produced from this crude must be exported, resulting in a 25 percent loss.

Currently, only Pakistan Refinery Limited (PRL) is willing to refine Russian crude oil. If PRL is the sole refiner, consumers can expect a meager Rs1 reduction per liter in petrol and diesel prices.

However, if PARCO and NRL join forces to refine Russian crude, the benefit could increase to Rs3 per liter, depending on the volume of the crude. PARCO’s advanced facilities may help enhance the yields from Russian crude and reduce furnace oil production.

Refusal to Refine Russian Oil

PARCO and NRL have declined to refine Russian oil, posing challenges to maximizing the benefit.

The cost of Russian oil stands at $73 per barrel, while the Brent price is at $87 per barrel. Russia has reduced the discount to $5 per barrel, making the import of Russian oil above the $60 per barrel cap price imposed by G7 countries problematic in terms of payments.

The decades-old Pakistan Refinery Limited (PRL) adopted a strategy of refining Russian URAL crude by blending it with Middle Eastern and local crude. This process produced 10 percent petrol, 60 percent furnace oil, and 10-15 percent high-speed diesel.

Due to the heavy viscosity of furnace oil produced from URAL crude, PRL has to mix 10 percent diesel to decrease its viscosity so that it can flow. This leads to a significant increase in furnace oil production and a reduction in diesel production.

The use of Russian crude in Pakistan’s fuel production is a complex issue with various challenges and potential benefits. The decision on how to proceed will have implications for fuel prices and the country’s energy landscape.