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Private Pakistani refiner Cnergyico has recently imported the first Russian crude cargo in the private sector in the South Asian country, a company spokesman has told Reuters.
Pakistan has so far imported Russian crude on a government-to-government basis in a trial run of imports with cargoes that arrived in June.
Cnergyico’s import of a cargo of the Russian Urals grade is the first purchase of Russian oil from the private Pakistani sector.
The private refiner, which operates Pakistan’s largest refinery with 156,000 barrels per day (bpd) capacity, has consulted sanctions counsel and carried out due diligence to ensure that the purchase doesn’t breach the sanctions against Russia, Cnergyico’s spokesman told Reuters.
The refiner, which operates about one-third of Pakistan’s total refining capacity, plans to process the Urals grade into diesel and gasoline for the domestic market and fuel oil for export to generate foreign currency.
Cnergyico’s spokesman declined to reveal to Reuters in what currency the deal was made.
In the government-to-government agreement for Russian crude earlier this year, Pakistan paid in Chinese yuan.
Pakistan has been desperate to import energy at low costs after it was outspent on the market last year when oil and gas prices surged while its foreign exchange reserves dwindled. The country has a currency swap with China, which would make it easier to pay for crude than using the little U.S. dollar reserves it has.
“We hope that if this becomes a long-term arrangement, it’ll become a rupee and Chinese currency transaction,” Pakistani Minister of Power, Khurram Dastgir Khan, told Bloomberg back in May, commenting on the imports of Russian crude oil.
According to more recent reports, Pakistan is reportedly seeking a better deal with Russia after the trial government-to-government crude purchase agreement was found to be uneconomical, two Pakistani government officials told Nikkei Asia in August.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.