The government of Pakistan has made major progress in purchasing oil from Russia. The government has written letters to local refineries about buying oil from Russia and invited suggestions for this purpose.
The energy ministry wrote letters to oil refineries and asked them to send their suggestions to the Pakistani government as to what would be the quantity and payment method of oil from Russia and what would be the transportation cost of importing it. They further inquired as to whether or not buying oil from Russia would affect agreements with Arab countries.
This is an interesting development as purchasing oil from Russia has been a point of conflict between the incumbent government and its predecessor. Former Prime Minister Imran Khan has repeatedly claimed that Russia had agreed to sell oil to Pakistan at a discounted rate. Former Energy Minister Hammad Azhar even showed a letter written to Russia on the matter as evidence.
On the other hand, the incumbent government has continuously rejected that the previous government and Russia ever inked a deal for cheaper oil. However, with the ongoing oil crisis, it seems Pakistan has no other choice but to buy oil from Russia.
According to reports, Pakistan’s monthly fuel oil imports are set to hit a four-year high in June. The country’s fuel oil imports could climb to about 700,000 tonnes this month, after hitting 630,000 tonnes in May.
Pakistan's fuel oil imports hit 4-yr high as it struggles to buy LNG – data https://t.co/Z2taYXmqMu
— Gibran Peshimam (@gibranp) June 27, 2022
On the other hand, importing Russian oil will be a difficult feat as the cons outweigh the pros. All the refineries had the technical capacity the extent of 30 to 35 percent to process Russian crude grades with minor adjustments. None of the Pakistani refineries can handle 100pc Russian crude of any grade.
Moreover, many Pakistani oil importers lack the financial backing for such a large-scale venture. Leading Pakistani banks cannot take such a risk because their operations are mostly aligned with western countries that have sanctioned Russia due to its military actions in Ukraine.
Read more: Russia Ukraine Crisis: Why Russia?
Lastly, Russia’s disinterest to sell oil to Pakistan is also a major hurdle. As per reports, a recent foreign ministry meeting discussed exploring energy imports, particularly crude from Russia, but no conclusive direction could be adopted.