The implications of this transaction are huge for Pakistan. It marks the beginning of a new relationship between the two nations and a positive step towards economic growth, energy security and affordability. Pakistani officials, including the Prime Minister, view this development as a game changer and a win-win for the people.
Interestingly enough, the selling of shares by Shell is actually good news for the investors. It is a sign that the country is dependent on more sources than just Arab or American. The possible impact of Russian oil on the investment market is certainly a factor here and this move could help the investors sell their shares in profit rather than loss in the future. In a policy budget speech, Ishaq Dar invites foreign oil companies to keep local reserves as the Government intends to remove taxes before 30th June 2023.
Pakistan’s refining capacity is approximately 19.4 million tonnes (Nov 2021). Euro 2 and Euro 4 fuels are produced in Pakistani refineries, however, production of Euro 5 fuels in the country is limited or non-existent. The final value of the products obtained after refining Russian crude oil has not been calculated at this time.
The arrival of this significant cargo has yet to be fully realized in terms of energy security and economic growth. However, it is definitely a positive sign for Pakistan’s future. The complexities of the international trade industry and the dynamic nature of the oil industry are showcased in this journey.
Last year, I highlighted the fact that Pakistan lacks the necessary refinery infrastructure to process petroleum. Considering the recent government claim about signing a deal, I presumed that the United Arab Emirates (UAE) or Saudi Arabia would undertake the refining process on behalf of Pakistan. However, to my surprise, it appears that India is the country responsible for refining the oil.
