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Russia To Sell Crude Oil And Oil Products To Pakistan At A Discount

Russia has agreed to supply crude oil, diesel, and gasoline to Pakistan at discounts, Pakistan’s Minister of State for Petroleum, Musadik Malik, said on Monday.   

Monday saw the beginning of the EU embargo and the associated price cap of $60 per barrel on Russian crude oil, which the EU and the G7 imposed in order to reduce Putin’s oil revenues but keep Russian oil flowing.   

Many large customers in Asia haven’t joined the price cap mechanism, but China and India, for example – Russia’s top crude oil buyers now – are demanding steep discounts for the Russian grades.

Pakistan, for its part, has struggled a lot with procuring energy this year after the surge in prices for oil, natural gas, and coal.

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Malik led a visit to Russia last month, and now, he told local media, “Our visit to Russia turned out to be more productive than planned.”

The minister, however, didn’t go into details whether Pakistan’s crude oil imports from Russia would comply with the $60 price cap, or how much the discount was.

Pakistan is also seeking to negotiate long-term deals with Russian firms for the supply of liquefied natural gas (LNG), the Pakistani minister said.

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Last month, an official from the petroleum ministry said that Pakistan had no other option but to ration natural gas supply this winter, with gas provided three times a day for cooking to households, amid acute shortages and a forex crisis in the world’s fifth most populous country. 

The energy crisis in Pakistan has deepened this year, and now, natural gas supplies will be very limited for households, according to officials.

Pakistan has been experiencing an energy crisis as the country cannot afford to import a lot of energy products at the current high prices. The stronger U.S. dollar and the sky-high LNG prices have worsened the country’s finances, with foreign exchange reserves down in October to their lowest level in three years.

By Charles Kennedy for Oilprice.com

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  • Francisco Napoleao on December 05 2022 said:
    Some may say it is about discounts, but as the market develop it is clear it is about having access to any crude oil or natural gas at all.
    If Pakistan has no reliable oil and gas supplier perhaps that's the dynamic that country has chosen.

    Now we see how dangerous it is to trust the market rules, when the market is so susceptible to be controlled by external forces. But the fact that the EU and US mostly as buyers have such a say in the way the market develops, that should be a reason for oil producers to understand they have to take measures to block it from happening.

    It is not about Russia, as before it was about Iran or Venezuela. Actually anyone can be annoyed with the energetic weapon by the EU and US. OPEC seams to understand it. And we even hear that other industries are feeling uncomfortable as prospects of likewise interventions could happen to other commodity markets.

    Some even try to invert the rhetoric, characterising the actual crisis as a self inflicted heroic measure by the EU. How ridiculous is that. This is selfawered power showing. This is a crisis to submit the markets to the ruling of the EU, markets that are not under the judition of the EU. How hard is that to understand? Just if you are an outsider, would one believe in such a beautiful fairy tale.

    Of course India and China are there for discounts, but discounts come as a price. Don't tell me the Russians are just giving discounts without take-or-pay contracts, that would be very funny, than the russians would just need to withdraw their production from the Market and wait for them to run begging. Now markets don't work so childish. India or China can afford to make opportunistic deals. These societies don't live on uncertainty. So who would believe the Indians and Chinese would be waiting for black friday deals to buy russian oil? They need steady supplies, not cat and mouse games.

    The point here is how much will Pakistan really receive from Russia, as Pakistan has been an unstable partner for everybody. The TAPI has not been started after decades. They need Gasprom support for financing and expertise but Pakistan was unable to secure plausibility. Without full commitment from Pakistan India also does not feel safe in investing.

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