Cnergyico receives first Russian oil cargo

With handling of 100,000 tons of oil at SPM facility, bigger ships can now be berthed in Pakistan

ISLAMABAD:

Cnergyico Pk has received the first cargo of Russian Urals crude at its Single Point Mooring (SPM) facility, which will clear the way for handling larger ships with oil consignments later.

Earlier, Pakistan Refinery Limited (PRL) imported 100,000 tons of Russian crude oil, which was first divided into two ships at an Omani port for onward transportation to Pakistan.

The shipment was split as Karachi ports did not have the capacity to handle bigger ships carrying 100,000 tons of crude oil.

However, now, with the handling of 100,000 tons of crude oil at the SPM facility of Cnergyico, bigger ships can be berthed in Pakistan. Oil industry experts say Pakistan can take benefit of Russian crude imports once refineries are upgraded under the brownfield expansion of plants. Following that, there will be no need to export furnace oil as it will be converted into either diesel or motor gasoline (petrol).

Cnergyico Pk Limited, in a statement, said that it received the first Urals cargo of approximately 100,000 tons at its SPM, which would be processed at one of its refineries. The company revealed that it had conducted detailed and extensive due diligence and consulted with its external sanctions counsel to make sure that the crude import did not violate any applicable sanctions.

“Any motor gasoline and diesel that we produce from the cargo shall be sold in the local market to meet the country’s energy needs,” it said. “This can help ensure stable fuel supply for the country, reduce dependence on product imports and save foreign currency.” Cnergyico also plans to export fuel oil to generate foreign exchange for the country, which can contribute to economic growth and stability.

The processing of first Urals cargo marks an important milestone for the company and the country as well. “It demonstrates the company’s capabilities and readiness to refine different types and complexities of crude oil.” The previous government had approved a new refinery policy for the expansion of existing oil refining plants to ramp up production of diesel and petrol by around 100% in a bid to lessen reliance on imported fuels.

With the increase in diesel and petrol output, Pakistan will be able to make huge savings in the premium paid on oil imports.

Experts point out that SPM, the first such facility in Pakistan that transports crude oil from ships through a pipeline in the sea, is going to provide an opportunity for the entire refining sector to increase the import of crude oil.

At present, the existing refineries meet 30% of the country’s petrol demand. With the new policy, their capacity is anticipated to double in the next six years, reaching 60% of the overall requirement, according to sources. Similarly, the refineries meet 50% of the country’s diesel demand. In this case too, their capacity is projected to double in the next six years, indicating that domestic production will cater to 100% diesel demand.

Officials estimate that by bolstering the local production of petrol and diesel, the country will save approximately $600 million in foreign exchange annually.

Last week, Pakistan received its first shipment of LPG from Russia, Moscow’s embassy in Islamabad said, marking Islamabad’s second major Russian energy purchase, Reuters said. The shipment, which the embassy said was delivered with Iranian help, comes after Pakistan received its first-ever delivery of Russian crude under a deal struck between the two countries earlier this year.

Russia delivered 100,000 metric tons to Pakistan through Iran’s Sarakhs Special Economic Zone, the Russian embassy said in a post on social media. The embassy said consultations on a second shipment were under way. Pakistan said it had paid for the Russian crude in Chinese currency but the value of the deal was never disclosed. Energy imports make up the majority of Pakistan’s external payments and discounted imports from Russia offer economic respite.

Published in The Express Tribune, October 3^rd, 2023.

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