The Slippery Stance of Refining Russian Oil

Can Pakistan's oil refineries refine Russian crude?

Russian military offensive on Ukraine marked the visit of the former premier Imran Khan to Russia. The ill-timed visit irked the eyes of the self-proclaimed vanguard of democracy, aka the United States. Donald Lu's threatening cipher to Pakistan and the ouster of the PTI government through an allegedly "foreign-sponsored" successful no-confidence motion (NCM) followed the basis for the 'Ghulami Namanzur' stance.

The main agenda of the visit was to hold talks to resume the long-delayed Pakistan Stream gas pipeline (formerly North-South gas pipeline), initiated in 2015. As per Reuters:

"According to Russian media reports, shareholder agreement for the Pakistan Stream should be signed this month (February)."

However, after the arrival of the coalition government, the Petroleum Division remarked that no such deal was in place. While this is a different debate, another debate has sparked - whether Pakistan can refine Russian crude oil or not?

Since the Russia-Ukraine conflict, despite the sanctions imposed, Russia has found its crude oil customers in the form of India (importing the Urals) and crisis-hit Sri Lanka (importing Siberian Light). While many have been dismissive of the stance that Pakistani refineries can refine low-cost Russian oil, the author's research suggests otherwise. It is a short disclaimer that the author is not a subject matter expert on oil and gas. However, the author draws his research from credible resources, including ExxonMobil, S&P Global Commodity Insights, McKinsey Energy Insights, American Enterprise Institute (AEI), and other sources.

Russia produces seven types of crude oil, namely:

1. ESPO (Eastern Siberia Pacific Ocean)
2. Urals
3. Sokol
4. Sakhalin Blend
5. Arctic oil
6. Novy port
7. Siberian Light.

Currently, Pakistan mainly imports Arabian Light from Saudi Arabia. To assess whether our refineries can refine Russian oil, the author will consider two significant parameters: API gravity and sulfur content. Short for American Petroleum Institute, the more the API gravity, the lighter the fuel. It might be self-explanatory, but since sulfur is corrosive, the less the sulfur content, the "sweeter" the crude and is easier on the machinery.

To put things into context, the API gravity of Arabian Light ranges from 31 to 34 degrees. Meanwhile, the sulfur content is to the maximum of 1.5 (mass/weight) percent. Now, let's compare these parameters to those of the Russian oil variants.

1. ESPO: API gravity (34), sulfur content (0.5)
2. Urals: API gravity (31.1), sulfur content (1.7)
3. Sokol: API gravity (34.8), sulfur content (0.3)
4. Sakhalin Blend: API gravity (45.5), sulfur content (0.16)
5. Arctic oil: API gravity (35-37), sulfur content (0.5)
6. Novy port: API gravity (35), sulfur content (0.1)
7. Siberian Light: API gravity (37.8), sulfur content (0.4).

Pakistani refineries are ideal for refining Arabian Light crude oil possessing 31-34 degrees of API gravity and 1.5 percent of sulfur content. Hence, Pakistani refineries can refine Russian variants with equal or higher API gravity and equal or less sulfur content than the Arabian light. Hence, Pakistan's six operational oil refineries can refine the following:

1. ESPO: API gravity (34=34), sulfur content (0.5<1.5)
2. Sokol: API gravity (34.8>34), sulfur content (0.3<1.5)
3. Sakhalin Blend: API gravity (45.5>34), sulfur content (0.16<1.5)
4. Arctic oil: API gravity (35>34), sulfur content (0.5<1.5)
5. Novy port: API gravity (35>34), sulfur content (0.1>1.5)
6. Siberian Light: API gravity (37.8>34), sulfur content (0.4<1.5).

Originally published at https://rafeyirahman.substack.com on May 29, 2022. If you liked this or learned something new, please consider subscribing to Finesse for more financial literacy posts.

 

[m52k85]

Guys are you two related to the petroleum industry?

 

[RafeyIR]

Hi,

So blending a low API Kuwait crude with really high Sulfur content is all kosher and economical but not Urals, right? You are again being dishonest. I have shared with you the Urals API figures (from Feb 2022), which is in between 31.3 - 31.5. Please plot in here and see the difference between two.

View attachment 850338

Yes, the API gravity of the Urals is 31-something as I said previously. Also, I said that Pakistan can buy the Urals but not as a standalone substitute. See, I'm again endorsing your POV and not being dishonest. You are lacking the ability to comprehend my point. Also, I never negated your data sources.

 

[RafeyIR]

Guys are you two related to the petroleum industry?

No, I'm not. However, I draw my research from credible sources like ExxonMobil, etc. Also, you can read Mr. Ahmad Waqar's piece who is a subject-matter expert on oil and gas. We both share similar conclusions. Link to his piece: https://dailytimes.com.pk/941643/russian-oil-and-pakistans-dilemma

 

[farok84]

Yes, the API gravity of the Urals is 31-something as I said previously. Also, I said that Pakistan can buy the Urals but not as a standalone substitute. See, I'm again endorsing your POV and not being dishonest. You are lacking the ability to comprehend my point. Also, I never negated your data sources.

Hi,

Then we are in agreement, we can buy all crude blends that are between API 30-35, with lowest Sulfur content (and lowest price), our refineries should not have any (technical) issues refining them.

I think I got a bit bitter as I have been explaining this on other threads for sometime and I apologize for being harsh (grumpy).

Guys are you two related to the petroleum industry?

Hi,

I am.

https://defence.pk/pdf/threads/introduction.507174/

 

[RafeyIR]

Hi,

Then we are in agreement, we can buy all crude blends that are between API 30-35, with lowest Sulfur content (and lowest price), our refineries should not have any (technical) issues refining them.

I think I got a bit bitter as I have been explaining this on other threads for sometime and I apologize for being harsh (grumpy).




Hi,

I am.

https://defence.pk/pdf/threads/introduction.507174/

No problem!

 

[m52k85]

@RafeyIR and @farok84, so what is consensus gents? Is Pakistan able to refine Russian oil? I need to know before I discuss politics with my dad next time.

 

[farok84]

@RafeyIR and @farok84, so what is consensus gents? Is Pakistan able to refine Russian oil? I need to know before I discuss politics with my dad next time.

Hi

Yes, Pakistan refineries can refine Russian Crude including Urals Blend.

 

[RafeyIR]

@RafeyIR and @farok84, so what is consensus gents? Is Pakistan able to refine Russian oil? I need to know before I discuss politics with my dad next time.

Pakistan can refine certain variants of the Russian crude.

 

[farok84]

Russian ship carrying 750,000 barrels crude to arrive in June​

By Khalid Mustafa
May 05, 2023

ISLAMABAD: A Russian test cargo carrying 750,000 barrels of crude would likely arrive in the first week of June, which will determine the future of fuel trade if found cheaper after the refining cost, including margin.

A senior official of the Energy Ministry told The News that the cargo might also reach by the end of May. “Pakistan will pay the price of crude most probably in China’s currency—Yuan and the Bank of China may play its role for transactions,” the official said.

However, the official refused to divulge in crystal clear terms the details about the mode of payment and the exact discount arguing it is not in the interest of the country and the seller also does not want to make it public fearing backlash from the other countries buying Russian oil directly from Moscow.

“Russia will provide URAL crude in the test cargo and most probably Pakistan Refinery Limited (PRL) will be tasked to refine the Russian crude,” he added.

Commercial analysis of Russian crude has been conducted in favour of Pakistan’s economy but it will further be cross-checked after refining the Russian oil. The shipping cost of the Russian oil has also been estimated somewhere at $15 per barrel, but it will be finalised after it arrives at the Pakistan port.
Other sources confided that Pakistan has finalised the per barrel price close to $50-52 per barrel against the cap price of G7 countries at $60 per barrel.

Refineries have been importing 80 percent of crude under long-term agreements from ADNOC and Saudi Aramco and in the remaining 20 percent there is a cushion to purchase Russian oil under GtG on a long-term agreement to some extent. But the government would also prefer to keep some cushion for purchasing the crude from international market as the crude price can go down even blow the cost signed under long-terms agreement.

“Pakistan had earlier desired to get Russian crude price with a discount close to $50 per barrel, $10/barrel below the cap price imposed by G7 countries on Russian oil in the wake of the war on Ukraine.”

However, one of the top guns in the coalition government said that the decision to import Russian crude under the GtG agreement at a 30 percent discount might not provide the required relief.

Russian ship carrying 750,000 barrels crude to arrive in June

ISLAMABAD: A Russian test cargo carrying 750,000 barrels of crude would likely arrive in the first week of June, which will determine the future of fuel trade if found cheaper after the refining...

www.thenews.com.pk

https://twitter.com/x/status/1515583336206548992

Either PRL has gone through massive infrastructural upgrade (within a year) or these pseudo intellectuals were blatantly lying to the masses. Pakistan is not only importing Russian crude but Urals specifically.

 

[farok84]

Explaining the reasons behind the belated arrival of Russian cargo at the Oman port, the official said, “The vessel, which was loaded with Ural crude on April 21 at a Russian port, got delayed by 10 days due to technical reasons. It then arrived at Egypt’s Suez Canal on May 17, where it waited in a long queue for 12 days to cross the canal.”

The vessel reached Duqm on June 7 after a two-day journey across the Red Sea.

“The delay in the arrival of the cargo will not increase the transportation cost, as it is already settled with the Russians,” he said. “The PRL will refine the crude oil, blending it with the crude imported from the United Arab Emirates and Saudi Aramco.”

Tanker carrying 50,000 tonnes of discounted Russian crude docks at KPT

ISLAMABAD/LAHORE: In a welcoming development, the much-awaited cargo of 50,000 tons of discounted Russian crude oil docked at the Karachi Port Trust at 3am on Sunday. The vessel reached the...

www.thenews.com.pk

 

[ghazi52]

LPG from Russia .......

https://www.facebook.com/video.php?v=1430037847745530