In a bid to diversify, Pakistan plans oil imports from Russia

Published: December 31, 2017


ISLAMABAD: Pakistan is working on a plan now to sign a government-to-government oil import agreement with energy-rich Russia in a move that will lessen Pakistan’s excessive reliance on Middle Eastern countries.

At present, Pakistan is importing oil from the Gulf Arab states including the United Arab Emirates (UAE), Kuwait and Saudi Arabia. For meeting gas needs, it is purchasing the commodity from another Gulf country, Qatar.

According to sources, the proposal for oil import from Russia was discussed in ministerial-level dialogue between Pakistan and Russia in Moscow.

Pakistani and Russian representatives noted the interest of Rosneft Oil Company of Russia and Pakistani companies in the trade of crude oil, oil products and liquefied natural gas (LNG). In that regard, due diligence may be conducted and relevant arrangements including an inter-governmental agreement may be considered.

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Pakistan has already been discussing oil and gas imports from Central Asian states including Azerbaijan in a bid to diversify its energy sources as it has overly banked on oil-rich Middle Eastern countries for decades.

Rosneft’s oil refining unit comprises 13 large refineries in key regions of Russia as well as three petrochemical plants, four gas-processing plants including the assets of Bashneft and the share in Slavneft-Yanos, two catalyst production plants and a service company.

In Germany, the company holds stakes in three refineries and controls more than 12% of oil refining capacity with annual output of 12.5 million tons. In Belarus, it indirectly owns 21% shares in OJSC Mozyr Refinery.

Russia has also expressed interest in constructing state-of-the-art energy plants in Pakistan for converting natural gas into synthetic oil, high-quality fuel or crude for the petrochemical industry.

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Though Pakistan is switching interest to gas imports for running power plants and many industries, there is still huge appetite for oil for domestic needs.

Pakistan’s economy and energy security depends heavily on regular and sustainable supplies of imported fuels. At present, the demand for petroleum products stands at over 23 million tons per annum and it is expected to rise to 27 million tons by 2020.

Of the total, 10 million tons, or 44%, are produced by domestic refineries and 13 million tons (56%) are brought through imports.

Similarly, more than two-thirds of crude processed by domestic refineries is imported.

State-owned Pakistan State Oil (PSO) meets energy needs of consumers through a widespread network of depots across the country with storage capacity of around one million tons, which is around two-thirds of the total storage capacity of oil marketing companies in Pakistan.

PSO imports 10 million tons (over 75%) of petroleum products out of total imports of 13.2 million tons into the country.

Premier motor gasoline (petrol) demand over the past several years has shown an unprecedented growth, going up five times from 1.15 million tons in financial year 2007 to 5.8 million tons in financial year 2016.

Published in The Express Tribune, December 31st, 2017.

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Reader Comments (1)

  • powayman
    Jan 2, 2018 - 4:41PM

    Why buy oil from Russia which has long/expensive transportation cost when Pakistan is next door to major oil producers? Makes zero sense. Oil is a commodity – prices are public – the big variable is transportation cost. Recommend

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