ISLAMABAD: Petroleum Division is trying to procure Russian crude oil at around $50/barrel, at least $10/barrel below the price cap imposed by the G7 countries on the precious commodity being taken from Russia due to its war on Ukraine, sources told.

Currently, crude oil is being sold globally for $82.78/barrel.

Officials, involved in the virtual talks with Russia, shared that Moscow is more interested in completing all the prerequisites such as the mode of payment, shipping cost with premium, and insurance cost before signing the agreement with Pakistan.

Officials, who spoke to the publication on the condition of anonymity, said that Russia will respond about the discount in base price after the prerequisites are finalised. They added that the shipping of crude oil from Russian ports will take 30 days which would mean $10-15/barrel increase due to the transportation.

The talks between Moscow and Islamabad are going in a positive direction with the hope that a government-to-government deal on Russian crude import may be finalised before end of March.

To a question, they said, the government has decided not to divulge the mode of payment to Russia against the import of crude oil. However, authorities are considering whether they should use Pakistan National Shipping Corporation (PNSC) ships or Russian tankers to transport the crude.

“We also have to keep in mind the landed cost of Russian crude as the crude vessel will arrive in 30 days, owing to which per barrel shipping cost would hover at $10-15,” the official said, adding that Moscow has not agreed on the discount yet. “We fear that the maximum discount would be offset by the shipping cost of the crude oil.”

However, State Minister Musadik Malik had claimed in a press conference that Pakistan would get a 30% discount on Russian crude oil.

The government would import one Russian crude oil ship to test the landed cost as compared to the existing cost of crude being imported from Abu Dhabi National Oil Company (ADNOC) of United Arab Emirates and Saudi Aramco.

The Petroleum Division secretary is in Karachi to further deliberate with the top management of Pak-Arab Refinery Company Limited (PARCO), Pakistan State Oil (PSO), Pakistan Refinery Limited (PRL) and other refineries regarding the import of Russian crude oil to process it for finished products.

In case, the test ship’s cost is low enough to bring down the prices of petroleum, oil and lubricants, Pakistan would give a green signal for Russian oil cargos in a month.

Since Pakistan is facing a US dollar liquidity crunch, it would pay Russia in the currencies of friendly countries that include China, Saudi Arabia, and UAE.

The officials said that the ship carrying Russian crude will be insured by the National Insurance Company Limited (NICL) and Pakistan Reinsurance Company Limited (PakRE).

The State Bank of Pakistan (SBP) which was earlier hesitant for transactions with Russian banks, due to G7 restrictions, has now shown a willingness to talk with the Russian counter bank over a payment mechanism for oil import in three currencies other than dollars.