Exclusive: Cnergyico imports first private sector shipment of Russian crude oil to Pakistan

KARACHI, Oct 2 (Reuters) – Pakistani refinery Cnergyico (CNER.PSX) has imported the first private sector shipment of Russian crude oil into the country, it said on Monday, as the cash-strapped nation takes advantage of Moscow’s discounts on its oil exports.

The South Asian nation has begun purchasing crude oil that Russia discounted after its exports were banned from European markets due to Russia’s invasion of Ukraine. The first shipment from Pakistan, imported by the government, arrive in June and a second government-to-government shipment is being negotiated.

Private imports were not supposed to be commercially viable because, among other things, cargoes must be divided and transferred to smaller ships, since Pakistan’s ports cannot handle large tankers.

But Cnergyico used its single-point mooring, which can accommodate deep-draft tankers, a company spokesman said in response to questions from Reuters. The crude will be refined at the company’s refinery in the city of Hub, in the southwest of the country.

The processing of the shipment of 100,000 tons of crude oil from the Urals “marks an important milestone for the company and also for the country,” the spokesperson said. “It demonstrates the company’s capabilities and willingness to refine different types and complexities of crude oil.”

Cnergyico operates Pakistan’s largest refinery, with a capacity of 156,000 barrels per day (bpd), representing a third of a national capacity of 450,000 bpd. It is the only refinery with its own mooring at a single point.

Cnergyico plans to sell locally gasoline and diesel refined from Ural crude and export furnace oil, or fuel oil, typically used in industrial boilers, power plants and ship engines.

“There is ample demand for furnace oil in the global market, which can help Pakistan generate foreign exchange,” the spokesperson said.

Cnergyico conducted due diligence and consulted with outside sanctions lawyers to ensure the import of Russian oil did not violate sanctions, it said.

Pakistan intends to import 100,000 bpd from Russia this year, which would account for the bulk of its total imports, would help address a currency crisis and keep record inflation at bay. Last year, Pakistan’s total crude oil imports amounted to 154,000 bpd.

The government paid Chinese yuan for its first import of discounted Russian crude oil, which went to the state-owned Pakistan Refinery Ltd. (PKRF.PSX).

Cnergyico declined to comment on what currency it used to pay for its Russian cargo. A source familiar with the deal told Reuters that Cnergyico will also pay in yuan through a letter of credit from a Chinese bank.

However, the benefits of Russian discounts are being make up for due to increased shipping costs and lower quality fuels produced from heavy, sour Ural crude oil compared to refined products from crude oil from major suppliers Pakistan, Saudi Arabia and the United Arab Emirates, analysts say.

Cnergyico said it hopes to make Russian imports viable by exporting furnace oil to generate foreign exchange.

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