KARACHI: Pakistan Refinery Limited (PRL), one of the country's largest oil refineries, has entered into a long-term agreement with Russian companies for the supply of crude oil, the company's chief executive officer said on Wednesday.
"PRL is negotiating with the Russian companies for the next cargo of crude oil in December this year," a source in the oil sector said.
The deal was finalised during the Russian Energy Forum, which was held last week in Moscow and attended by the caretaker Energy Minister Mohammad Ali.
Minister Ali said that Pakistan was considering signing a long-term agreement to purchase between 700,000 and 1 million tonness (up to 20,000 barrels per day) of Russian oil per year, as part of its efforts to diversify its energy sources and reduce its dependence on the Gulf states.
Zahid Mir, the chief executive officer of PRL, said the company had signed a long-term contract with its Russian counterparts for the supply of crude oil of mutually agreed specifications.
"It is expected that the first cargo will be delivered to PRL later this year in December," Mir said, without disclosing the duration or the price of the deal.
This will be the third shipment of Russian crude oil to Pakistan this year. The first cargo of 100,000 tons arrived in June and was received by PRL under a government-to-government arrangement.
The second cargo of 100,000 tons arrived in September and was imported by Cnerygico, another local refinery, on commercial terms.
PRL, which operates a 50,000 barrels per day (bpd) refinery in Karachi, has been nominated as the procuring entity for the purchase of crude oil from Russia, as per the commitments made at the Pakistan-Russia Inter Governmental Commission held in January.
The government has scrapped its plan to create a special purpose vehicle for the import of Russian crude oil and has allowed the refineries to import it as per their commercial interests.
The PRL had blended 50 percent of Russian oil with an equal ratio of Arabian crude imported from the Gulf states in its previous cargoes, and that the Russian oil had produced more fuel oil than diesel and petrol.
Pakistan imports about 85 percent of its oil needs, mainly from Saudi Arabia and the United Arab Emirates. It has been looking for alternative sources to reduce its dependence on the Middle East and to cope with rising demand.
