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All Pakistani banks refuse to open LCs for Russian crude oil import

Lincoln

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It is exactly about national interests. We have minimum diplomatic relationship with Russia let alone economic or defence ties. We have no border with Russia unlike sea-border with Arab world where they can easily transport the crude oil into Pakistan. We have no established routes with Russia and it takes years to build one that is economically viable.


Say in clear words… I don’t understand the language that you are speaking to yourself.


I don’t know when we imported Russian wheat but it is always going to be more expensive than importing it from neighbouring countries like India or Iran.

PS: Talking about importing wheat itself is a failure for Pakistan as we were historically self-sufficient in agriculture especially production of wheat

The transportation excuse seems reasonable but it's hard to believe when our neighbor India had 100 million barrels of crude oil shipped from Russia this year alone. About 819,000 barrels daily. It's clearly so profitable that Russia deseated Saudi Arabia to become the 2nd largest supplier of oil to India. It doesn't cost anymore for a Russian tanker to come to Pakistan than it does to come to India.

And do we really need some sort of an established route? Pretty sure Russian tankers pass through Pakistani waters on the way to India. The route is already there. We're just making excuses.
 

maithil

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If govt wants, it can suggest banks to look for ways . Looks like govt itself is just pretending to enquire and then say it's impossible.
 

Finer

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The transportation excuse seems reasonable but it's hard to believe when our neighbor India had 100 million barrels of crude oil shipped from Russia this year alone. About 819,000 barrels daily. It's clearly so profitable that Russia deseated Saudi Arabia to become the 2nd largest supplier of oil to India. It doesn't cost anymore for a Russian tanker to come to Pakistan than it does to come to India.

And do we really need some sort of an established route? Pretty sure Russian tankers pass through Pakistani waters on the way to India. The route is already there. We're just making excuses.
India has been trading with Russia for the long time. It made sense for india to plan and invest on delivery system for years with Russia and they have been doing since the time Pakistan was at war with Russia.

The relationship between Pakistan and Russia is new and unpredictable as the geopolitical situations are changing and so are the strategies regarding the wars. So, it is impossible to plan all at once in the short period of time expecting to wave your magic hands and it is there.

If govt wants, it can suggest banks to look for ways . Looks like govt itself is just pretending to enquire and then say it's impossible.
Not possible. Russia wants Pakistan to buy in Russian currency which is useless and unacceptable to Pakistan bank. No one in right mind would support bankruptcy in the name of Russian currency that is sanctioned and threat to petro dollars. So I can understand bank position given they have a lot at stake and the government aren’t exactly trustworthy given the corruption.
 
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The Accountant

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as I argued couple of weeks ago, it makes no sense to buy oil from Russia right now. Russia is not China where we can consider taking a risk of compromising our relationship with Arab World, Europe and USA.

For a common Pakistani, The simple definition of Russia is that its friend of India. If we want to better our ties with Russia we should engage with them about future prospects but implement that vision after the war with Ukraine is over.
It is not a favor to russia ... Pakistan is about to default ... All this load shedding is due to expensive oil ...
 

ziaulislam

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View attachment 858599
  • Banks say payment in dollars not possible against import of Russian oil.
  • Commercial banks cite Russia-Ukraine war reason for not opening LCs.
  • Oil refineries also cite several problems in importing crude oil from Russia.
ISLAMABAD: All Pakistani commercial banks have refused to open letters of credit (LCs) for Russian-origin crude oil in the light of economic sanctions by the United States, the United Kingdom and the European Union against Moscow for invading Ukraine, The News reported Saturday.
The commercial banks, according to the publication, have stated that payment in US dollars is not possible against the import of Russian crude oil.
However, if the government manages to enter a G2G agreement with Russia for the import of crude oil under transaction mode based on the rouble — ensuring no impact of sanctions on Pakistan — the refineries can utilise crude oil up to 15-30%, keeping in view its technical suitability for making finished products.
On the other hand, the refineries are in their short and long-term agreements with Abu Dhabi National Oil Company (ADNOC), Aramco, and Kuwait Petroleum Corporation (KPC) for crude oil imports.
More importantly, the current transportation freight for imports from Russian ports is estimated in the range of $3-3.5 million compared to the current freight of $0.8-1.0 from the Middle East ports and the sea voyage from the Black Sea would be around 16-26 days compared to 4-5 days from the Middle East.
This means that the freight charges, from Russia’s ports to Karachi, stand at $8 per barrel which is 8-12 times higher in comparison to the United Arab Emirates (UAE) ports.

Related items​


This is the essence of the written responses of four refineries — PARCO, BYCO (Cnergyico Pk Limited), PRL, and NRL — to the government against letters written to them on June 27, seeking recommendations on five issues, which included the technical suitability of the Russian crude oil, quality and grades, cost of transportation and freight charges, payment mechanism, and existing terms of the contract.

Can utilise Russian oil up to 15-30%: PARCO​

According to the copy of the written responses available with The News, Pak-Arab Refinery (PARCO) said that a detailed technical analysis of processing Russian crude oil can be assessed based on the crude oil blend of Russian grades along with the current grades.
The PARCO wants to ask for samples of Russian grades like SOKO, ESPO and URALA, and Serbia Light, saying it can utilise Russian crude oil up to 15-30% keeping in view its technical suitability for making the finished products.
PARCO said at the maximum, it can import one or two cargoes of 70,000MT to process in a month as most of the Russian crude oils are heavier than its imported grades, therefore, to manage product mix, these can be processed by replacing the Arab Light crude oil.

High freight charges​

BYCO refinery, which imported two Russian crude oil cargoes in the past, has said that the voyage time from Russian ports to Karachi varies from 28-37 days and freight charges are 8-12 times higher in comparison to the UAE ports.
Since a very limited number of vessels are reporting at the Russian ports due to the risk of sanctions, this can further increase the freight charges. Cnergyico also asked Pakistan and Russian governments to decide on an effective payment channel because as per prevailing conditions, it will be difficult for commercial banks to open LCs due to the risk of sanctions.
It also says that it's crude procurement maintains a balance between spot and term cargoes for a particular quarter based on market fundamentals. However, the BYCO refinery says it can absorb some of the Russian crude oil.
More importantly, the Russian crude oils vary from field to field and some of them are technically suitable keeping in view each refinery configuration.

Difficulties in product disposal​

PRL said that it has graded three Russian crudes that including SOKOL, ESPO, and URAL. SOKOL crude oil is the first preference in terms of quality grading, ESPO second, and URAL comes third in terms of preference.
While, the PRL said that SOKOL is a light and sweet crude, it has higher middle distillates and low fuel oil contents. SOKOL would always be the first-choice crude for PRL when compared with other available grades.
It said that the ESPO is fairly sweeter crude with a medium-light blend. However, its only demerit is the higher quantum of fuel oil, and its disposal will always be a daunting task the URAL, PRL says, it’s a mix of both heavy, light and sour crudes.
Urals Sulphur content varies from 1.4% to 2.%. Higher Sulphur content variation in this crude will naturally reflect in its product slate, thereby making it difficult for the refiner to stipulate product Sulphur specifications.
This crude also contains higher volumes of fuel oil and will always pose difficulties in product disposal. Mentioning transportation and freight analysis for import from Russia crude oil in comparison with the normal imports from the Middle East, the PRL said it imports a major chunk of its crude oil from the Middle East region, where freight varies between $1.0-1.5 per barrel. And Freight charges from the KOZMINO port of Russia to Karachi are $8.0/barrel as quoted by the national carrier as a provisional quote.
The PRL also mentioned that the sea voyage time from KOZMINO port to Karachi is approximately 22 days.
About the existing commitment to upliftment from the Arab Gulf region concerning term contracts, the PRL said that according to current term contracts with ADNOC, ARAMCO and KPC 1.2 million MT/ 9.0 million barrels per year are required to be uplifted.
The PRL said after fulfilling its current crude oil term, contract obligations can explore the possibility of processing an additional 300,000-400,000 MT per year.

Route likely to pass through war zones​

The NRL, in its one-page response, said that currently LCs are not being confirmed by the international banks because of the country's risk and commercial banks are not inclined to open LCs for the import of Russian crude oil in the presence of sanctions against Russia.
It also said that the normal sailing time from the Middle East is about four days, whereas it is estimated that the voyage time (one way) would be 20 days from Russia.
Moreover, the route is likely to pass through war zones owing to which risk factors will increase manifold. The NRL suggested the government carve out a doable payments mechanism.
Lol.
Bank can't open Lc as Russia out of swift system.

This is like saying my donkey refuse to fly .sir donkeys don't fly!.

You need to set up an alternative payment plan like half of the world did
 

Finer

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Lol.
Bank can't open Lc as Russia out of swift system.

This is like saying my donkey refuse to fly .sir donkeys don't fly!.

You need to set up an alternative payment plan like half of the world did
And that too in Russian currency.

Sanctioning Russia actually boosted Russian currency. Whereas buying Russian oil in Russian currency is war to petro dollars and Pakistan remittance is dependable on petro dollars while india can get away due to courtesy of Israel that pigeon-holds USA.
 

ziaulislam

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And that too in Russian currency.

Sanctioning Russia actually boosted Russian currency. Whereas buying Russian oil in Russian currency is war to petro dollars and Pakistan remittance is dependable on petro dollars while india can get away due to courtesy of Israel that pigeon-holds USA.
Except for Europe everyone else double down on buying Russian oil including USA allies like Egypt and Indiai think it's a completely voluntary decision
None has forced Pakistan
They same way it's voluntary decision not to create mechanism to get Iranian gas
 

Finer

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Except for Europe everyone else double down on buying Russian oil including USA allies like Egypt and Indiai think it's a completely voluntary decision
None has forced Pakistan
They same way it's voluntary decision not to create mechanism to get Iranian gas
Europe and India are different story. They don’t need USA and one of them has Israel’s backing.

Since the history of Pakistan’s independence, USA has always threatened with sanction or offered incentives to look other way which ended up hurting Pakistan in the long run.

USA wants India unharmed while Pakistan harmed given Israel position that pigeon-holds USA.

Sanction on Pakistan is real threat.
 

SoulSpokesman

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@Lincoln @Zaki @Finer

The transportation excuse seems reasonable but it's hard to believe when our neighbor India had 100 million barrels of crude oil shipped from Russia this year alone.

It made sense for india to plan and invest on delivery system for years with Russia

There is no great magic when it comes to transporting crude, it is done through tankers. Yeah if it was LNG you would have to look at things like terminal capacity, regassification capacity etc.

It is a combination of two things really.

1. Finances- how do Pak oil companies finance the transaction given the stretched balance sheet of both companies themselves and the govt they represent.

2. Threat of sanctions- Most crude that India is importing is being re-exported to the EU and sparing them the embarrassment of showing increasing direct Russian imports. Little is being consumed internally. By contrast any Pak imports will be for domestic consumption which will not be acceptable to the West.

Regards
 

Lincoln

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India has been trading with Russia for the long time. It made sense for india to plan and invest on delivery system for years with Russia and they have been doing since the time Pakistan was at war with Russia.

The relationship between Pakistan and Russia is new and unpredictable as the geopolitical situations are changing and so are the strategies regarding the wars. So, it is impossible to plan all at once in the short period of time expecting to wave your magic hands and it is there.


Not possible. Russia wants Pakistan to buy in Russian currency which is useless and unacceptable to Pakistan bank. No one in right mind would support bankruptcy in the name of Russian currency that is sanctioned and threat to petro dollars. So I can understand bank position given they have a lot at stake and the government aren’t exactly trustworthy given the corruption.

Fancy words here and there which make no sense.

Delivery system? I think you mean tankers. Russian tankers will deliver oil, it's not rocket science, we make a contract, place orders, they deliver. We have facilities to receive that and store that oil just like we do from Arab nations. The only concern was its processing and that concern is cleared.

Thanks for coming to my ted talk.
 

Finer

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Fancy words here and there which make no sense.

Delivery system? I think you mean tankers. Russian tankers will deliver oil, it's not rocket science, we make a contract, place orders, they deliver. We have facilities to receive that and store that oil just like we do from Arab nations. The only concern was its processing and that concern is cleared.

Thanks for coming to my ted talk.
India has been investing with Russia for a long time and India has refinery and structures as the result of dealing with Russia for the long time.

You are forgetting Russian currency. No bank in Pakistan would buy Russian currency to pose threat to petro dollars which plays huge role in remittance from Europe, North America and Arab worlds.
 

AZADPAKISTAN2009

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Just allow Russian Banks to Open Branch in Pakistan Problem Solved

>Trade Currencies , Russian Rubble / Chinese Yuan / Pakistani Rupee




Run a Electric Cable from Iran to Pakistan = We get cheap electricity Surplus

Open a Massive Duty Goods distribution Center at Iran -Pakistan border , massive trade increase

Allow Russian Banks to Open Branches in Pakistan = We increase our Trade with Russia

Allow Chinese Banks to Open Branches in Pakistan as well
 
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