PRL’s 1.2m-tonne long-term crude contracts leave little room for Russian blends

Tanveer Malik
Thursday, Sep 28, 2023

KARACHI: Pakistan Refinery Limited currently has long-term contracts with oil companies in the Gulf countries, which leaves very little room for PRL to refine significant quantities of Russian crude oil, The News learnt on Wednesday.

State sources privy to the oil sector said that PRL has long-term contracts of about 1.2 million tonnes of crude oil with ADNOC, Aramco and Kuwait Petroleum Corporation (KPC). “In this situation, only 0.3 to 0.4 million tonnes of Russian crude oil can be part of the overall crude oil volume of PRL,” official sources said, while quoting PRL which has apprised the government about its expansion plan and utilisation of Russian crude oil.

They said that PRL has evaluated major Russian crudes – Sokol, ESPO and Urals. The evaluation based on data made available to PRL and lab testing results showed that Sokol is a light and sweet crude that has higher middle distillates and low fuel oil contents. Espo is a fairly sweeter crude with a medium-light blend.

However, its only demerit is higher quantum of fuel oil, they said. Sources said that Urals blend is a mix of both heavy, light and sour crudes. It has higher sulphur content and higher volumes of fuel oil.

Oil sector sources said that these crudes could be processed by PRL with a blend ratio of 75 percent Sokol, 50 percent ESPO, and 35 percent Urals. However, they pointed out that the final decision on procuring any of these Russian crude oil blends would be made after evaluating their economic viability.

PRL sources also pointed out the limitations, such as the hesitation of Pakistani banks in issuing letters of credit for the import of Russian crude oil in dollars. A high-level delegation will attend an energy conference in Russia from October 10 to October 12. The delegation would meet with Russian officials on the side-lines to discuss energy cooperation, especially the long-term contract for Russian crude oil supply to Pakistan.

The first shipment of Russian crude oil was imported by PRL and it was the first and only refinery to process Ural oil in Pakistan. In the refining process, PRL was able to produce 60 percent of furnace oil, 10 percent of petrol and around 10-15 percent of diesel from the Russian crude.

Sources said one shipment would not serve the purpose and a long-term contract for the supply of Russian crude oil could help the country cope with the high prices of petroleum products.

Russia produces several different types of crude oil, but its main export blend is Urals, which is a medium sour crude. It also exports large volumes of ESPO blend crude to Asia, via the East Siberia-Pacific Ocean (ESPO) pipeline. Other grades include Siberian light, Sokol, Sakhalin blend, Arctic oil and Novy Port.