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.
The decision to import Russian oil from India instead of going through Saudi Arabia or the UAE could be attributed to India’s significant import volumes. It’s possible that diverting 100,000 tons from their supplies was a more convenient option, especially considering that Indian refineries are optimized to process larger quantities of Urals grade (heavy sour) crude oil. Nevertheless, this choice does seem unusual and deviates from the expected route.
