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Local Refineries in Pakistan Opt Out of Russian Crude Oil Acquisition

“Discover the latest challenges faced by local refineries as they navigate the impact of global furnace oil price drops. Learn how surplus stocks, export strategies, and hesitations in Russian crude oil imports play a crucial role in sustaining operations. Stay informed with our concise update on the evolving dynamics in the oil industry.”

Local Refineries in Pakistan Opt Out of Russian Crude Oil Acquisition

Local refineries are not eager to buy Russian crude oil right now because the prices for furnace oil around the world have dropped a lot. The refineries want to get Russian crude oil at a lower price because the cost of the last shipment is not practical anymore due to the global drop in furnace oil prices.

A national daily reported that the price of furnace oil fell from $80 per barrel to $60 per barrel in early December. This makes it difficult for local hydro skimming refineries to continue with their current operations.

Since the demand for furnace oil within the country has gone down, local refineries have a surplus of it. They are trying to sell this extra furnace oil to foreign buyers. However, importing Russian crude oil is a challenge right now because it produces more furnace oil as a by-product. With a large supply of furnace oil available at low costs, importing Russian crude oil becomes impractical.

To cope with the situation in December, the refineries exported a significant amount of furnace oil. Pakistan Refinery Limited (PRL) exported 35,000 tons, Cnergyico exported over 70,000 tons, and Pak Arab Refinery (PARCO) exported 100,000 tons so far this month.

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Comparing December sales to the same month last year, fuel oil sales were 34 percent lower. Additionally, they were 33 percent lower than in November 2023. Pakistan and Russia agreed at the beginning of the year for crude oil imports, with the first order being placed in April. PRL bought its first 100,000-ton cargo of Russian crude in June, and in October and November, Cnergyico Refinery imported two shipments totaling 110,000 tons of Russian crude oil.

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