Russia and Pakistan’s relationship is set to blossom with the arrival of their first-ever oil cargo! The journey of the Russian oil to Pakistan may come as a surprise to many, as the actual route taken is far more complex than initially thought. The cargo embarked on a journey from Russia to Iran, then to Oman and finally to India where it underwent refining, before being transported to the UAE and eventually reaching Pakistan.
The recent arrival of a cargo of Russian oil in Pakistan has sparked interest and curiosity about the shipping process involved. Initially believed to have followed a route from Russia to India, then to the UAE, and finally to Pakistan, new information suggests a more intricate journey. In this blog post, we will delve into the details of how Russian oil reached its destination and examine the implications of this transaction.
- The Original Route: Initially, it was thought that the Russian oil would travel from Russia to India, then to the UAE, and finally to Pakistan. While this route appeared logical, it has been revealed that the actual journey was more complex.
- Revised Route: The cargo of crude oil embarked on a journey from Russia to Iran, then to Oman, and further to India, where it underwent refining. From India, the refined oil was transported to the UAE before finally reaching Pakistan. This revised route reflects the intricacies of the oil shipping industry and the various trade relationships involved.
- The First Cargo: The first contract to sell Russian crude oil to Pakistan involved a shipment of 100,000 tons. On June 11th, 45,000 tons arrived at the Port of Karachi via the product tanker Pure Point, owned by a UAE-based company. The cargo was originally loaded in Omani waters at the Sohar anchorage between June 6th and 8th, having been transferred from the tanker Caroline Bezengi. The Caroline Bezengi had loaded the cargo in Primorsk, Russia, in May.
- The Second Cargo: The remaining 55,000 tons of oil from the contract were loaded onto the tanker Ionia in Primorsk, Russia. The Ionia, owned by Gatik Ship Management, departed from the Lakonikos Gulf in Greece. This departure location suggests the possibility of another ship-to-ship (STS) transfer near the Southern tip of Greece, potentially to comply with certain logistical or paperwork requirements. The Ionia is en route to Vadinar, India, indicating a similar refining process before heading to the UAE and finally reaching Pakistan.
- Perspectives and Implications: The arrival of the first-ever Russian oil cargo in Pakistan marks the beginning of a new relationship between the two nations. Pakistani officials, including the Prime Minister, view this as a positive step towards economic growth, energy security, and affordability. Hammad Azhar, from the opposition, has criticized the importation, citing delayed action and insufficient quantities. He suggests that Pakistan could have saved significant foreign exchange if regular consignments had begun earlier.
- Refining Capacity and Product Value: The total refining capacity in Pakistan is approximately 19.4 million tonnes (Please note that the specific refining capacity figure is unavailable within the provided information. The data is accurate up to 8 Nov 2021).
Pakistani refineries produce fuels compliant with Euro 2 and Euro 4 standards. However, the production of Euro 5 fuels in the country is limited or non-existent. (Please note that the availability of Euro 5 fuels in Pakistani refineries is not mentioned in the provided information).
The final value of the products obtained after refining Russian crude oil has not been calculated within the provided information.
- Payment Channels and Supply Chain Stability: There is no mention of the initiation of talks for payment channels or discussions regarding supply chain stability in the provided information.
Conclusion: The shipping process involved in transporting Russian oil to Pakistan reveals the complexities of international trade and the dynamic nature of the oil industry. While the initial assumptions about the route proved incorrect, the revised journey showcases the interplay between multiple countries and the various stages of refining and transportation. As Pakistan celebrates the arrival of this significant cargo, the implications for the nation’s energy security and economic growth remain to be seen.
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.
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.
It has been reported that the settlement for this consignment was made in Chinese Renminbi (RMB). Traders involved in the transaction were able to earn substantial profits from this shipment. Additionally, a trader based in the United Arab Emirates (UAE) apparently received a commission solely for invoicing the cargo. These details shed light on the financial aspects and incentives surrounding the deal, highlighting the potential benefits gained by various participants in the process.
In conclusion, the arrival of Russian oil in Pakistan is a historic moment and a testament to the growing relationship between Russia and Pakistan. With the potential of increased energy security, affordability, and economic growth, we look forward to seeing the positive benefits for the people of Pakistan. As always, these findings are based on the available data at the time of writing and may be subject to change or further updates. Alhamdulillah!