Russian Oil and Gas Industry: News #4

Germany is considering expropriating the German section of the Russia-led Nord Stream 2 gas pipeline project, cutting it off from the rest of the pipeline, and using the part on German territory for connecting to LNG supply that will come from Baltic Sea ports, German magazine Der Spiegel reported on Friday.

owais.usmani wrote:

Following footsteps of India, Pakistan is also now looking into the possibility of importing cheap crude oil from Russia.

Cons outweigh pros as govt examines Russian oil options

ISLAMABAD: The much-talked-about Russian oil imports intended for cost savings may not materialise at institutional level as the cons outweigh pros, coupled with Moscow’s disinterest.

Informed sources told Dawn all the refineries had the technical capacity to the extent of 30 to 35 per cent to process Russian crude grades with minor adjustments. None of the Pakistani refineries can handle 100pc Russian crude of any grade. This simply means that imports from Russia can help diversify oil sources.

As rising global oil prices took a heavy toll on all sectors of the economy, former prime minister Imran Khan floated the idea of buying discounted Russian crude. However, after the current coalition government came to power, Finance Minister Miftah Ismail claimed that Russia had not replied to the previous administration’s communication regarding the offer.

A financial arrangement in the given political and regional environment is the key challenge. In fact, one of the big refiners had recently on its own arranged a couple of cargoes of Russian crude, but this was done through a third-party deal. This means a private trader provided Russian crude at different ports to Pakistani refiners and hence payments did not go directly to any Russian entity.

However, a senior industry executive said such an arrangement on a larger scale was not sustainable. That is a major challenge because Pakistani importers — currently struggling to arrange normal letters of credit (LCs) for oil imports under the country risk profile and limited foreign exchange reserves — have no financial backing to take a plunge.

Leading Pakistani banks like the National Bank of Pakistan and Habib Bank could not take a risk in the given circumstances because their operations mostly aligned with western countries.

Relatively smaller banks like Faysal, Meezan and Habib Metro, having Middle Eastern or Swiss shareholding, could opt for such arrangements, but then a strong political will in Pakistan and even stronger commitment from Russia was required.

Several refining experts agreed that the government was doing an exercise to explore Russian oil imports, but it was more for optics than actual interest in imports given the tilt of leading coalition partners towards the West than Russia.

The sources said a recent foreign ministry meeting discussed exploring energy imports, particularly crude from Russia, but no conclusive direction could be adopted.

Based on discussions in that meeting, the Ministry of Energy asked its four refineries — three coastal and another in Multan — to give their input and analysis regarding crude imports from Russia.

They were asked to respond to the technical suitability of crude grade in view of each refinery’s configuration, yield, quantity and the grade of the subject crude required by the respective refineries.

The refineries were also required to give a transportation and freight analysis for imports from Russia compared to regular imports from the Middle East on cost and benefit analysis and possible payment methodology.

The refiners were also asked to give feedback on existing commitments of upliftment from the Arab Gulf region under various term contracts.

It is highly unlikely to happen since the Saudis are major bakers of Pakistan. Pakistan has wanted to buy oil and gas from Iran for eons but the Saudis and the US always "convince" them not to.

The thing which makes most financial sense for Pakistan, and India, is having piped oil and gas from Iran, it is right next door, plentiful and cheap. Both want it. But the Saudis and US always twist the Pakistanian's arms not to do it, and last decade the US managed to convince India as well not to even buy Iranian oil sent by ship.

Watch what is happening in Pakistan, Imran Khan went to Russia to buy wheat, and the US found a way to kick him out from government. And the current government is in the process of dismantling their own economy while under the control of the IMF.

Cons outweigh pros as govt examines Russian oil options

Pakistan's new pro-western government has no intentions of buying cheap russian crude which is fine, India is the bigger and much more important customer.

owais.usmani wrote:

Following footsteps of India, Pakistan is also now looking into the possibility of importing cheap crude oil from Russia.

Pak Oil Refineries Refuse To Buy Russian Oil

ISLAMABAD – While National Refinery Limited has excused from the import of Russian crude oil, all the refineries showing their limitations have said that the transportation cost, increase voyage time, low/no capacity to process it, payment procedure and the long term contract with Middle Eastern suppliers are the main hurdles in the way of the Russian oil import.

“We have a long term agreement with Saudi Aramco and maintaining current appetite/ feed of lube refineries we may not be able to process any other crude unless the techno/economic study suggests otherwise,” National Refinery Limited said in a letter (available with The Nation) to the Petroleum Division.

In response to the Petroleum Division’s letter on the import of Russian crude oil, the National Refinery Ltd has said that NRL has lube refineries and the configuration of the refineries restricts the list of feedstock. We have been from time to time unsuccessfully trying to identify alternate feedstock to Arabian light crude, which suits the refinery configuration.

“The normal sailing time from the Middle Eastern ports is about 4 days, whereas not being aware of the port of shipment ex-Russia and the possible route, it is estimated that the voyage time (one way) would be about 20 days. Moreover, the route is likely to pass through war zones,” said the letter.

“To our understanding presently the import L/Cs are not being confirmed by international banks because of country risk. Doable payments methodology can be arranged by government. NRL’s long term contract is with Saudi Aramco only, from where we are importing Arabian light crude oil required by our lube refineries. Also the government has SFD arrangement, with the government of Saudi Arabia.”

In response to the Petroleum Division letter on the import of Russian crude, Pakistan Refinery Limited (PRL) has said that PRL has evaluated Major Russian crudes Sokol, ESPO and Urals blend crude based on the data made available to us and the subsequent testing results. Our viewpoint is as under:

As per the view point of PRL Sokol, basically a light and sweet crude, Sokol 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.

ESPO blend: Espo is a fairly sweeter crude with a medium-light blend. However, its only demerit is higher quantum of Fuel oil, and its disposal will always be a daunting task. c) Urals blend: it’s a mix of both heavy, light & sour crudes. Urals sulphur content varies from 1.4% to 2.8%. Higher sulphur content variation in this crude will naturally reflect in its product slate thereby making it difficult for the refiner to meet the stipulated product sulphur specification. This crude also contains higher volumes of Fuel Oil and will always pose difficulties in product disposal.

However, detailed assays and samples of are needed to evaluate the physical and chemical properties of these crudes and their product streams.

Quantity and grades of subject crudes to be required by the refinery, Considering the highlighted points in and other available information’s and Urals with 1.4-1.6 % sulfur max, all above mentioned Russian crudes can be processed in PRL with a blend ratio of Sokol 75%, ESPO 50% and Urals 35% respectively.

The PRL current preference is Sokol crude. However, final decision on the procurement of the subject crude will be made after evaluating its economic viability in comparison with crudes that are currently being processed at PRL.

Transportation/freight analysis for import from Russia in comparison with normal imports from Middle East, cost & benefit analysis a) PRL import major chunk of its crudes oil from middle east region whose freight varies between 1.0-1.5 dollar per barrel. b) Freight charges from KOZMINO load port RUSSIA to Karachi is 8.0 dollar/barrels as quoted by national carrier as provisional quote. Similarly, the sea voyage time from KOZMINO port to Karachi is approximately 22 days.

Payment Methodology Confirmed Letter of Credit (L/C) in USD from first class bank will be required for payments. However, it is pertinent to mention here that presently all Pakistani banks are not willing to open LCs for Russian Origin crudes.

Existing commitment of upliftment from Arab Gulf region with respect to term contracts a) 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. b) PRL, after fulfilling its current crude oil Term Contracts obligations can explore the possibility of processing additional 300,000-400,000 MT/year.

PARCO in its response said that initial technical assessments on the basis of crude oil, assays of Russian Grades indicate that some of the Russian crude grades are technically suitable for processing at MCR in the range of 15-30% of the crude oil blend by replacing some of the existing grades.

Maximum one or two cargos of 70,000 MT of Russian can be processed at MCR in a month. Furthermore, since most of the Russian crude oils are heavier than our imported grades, therefore, to manage product mix, these can be processed by replacing Arab Light crude oil.

We have learnt that our Crude Oil Transportation Carrier (PNSC) is not permitted to call on Russian ports, therefore, alternate transportation arrangements would be required through supplier or trader. The current transportation freight for import from Russian Ports is estimated in the range of $ 3.0-3.5 million compared to current freight of $ 0.8-1.0 from Middle Eastern ports.

The sea voyage from Black Sea ports would also be around 16-25 days compared to 4-5 days from Middle Eastern Ports.

As per our understanding, payment in US dollars may not be acceptable to Russian companies. Therefore, payment mechanism will have to be devised between Pakistan and Russia and Local banks need to be supported on payment in Rubbles and to be facilitated for settlement of funds.

It was further responded that PARCO has term contracts with Saudi Aramco and ADNOC with committed upliftment of 110.000 barrels per day (06 cargoes per month) While Term contract with KPC is also in the process of finalization for upliftment on need basis. These commitments are sufficient enough to meet our crude oil requirements. Since Russian origin crude oil can only be processed in a certain quantity (15-30%), for a limited period, we can manage procurement of Russian origin crude oil without compromising on our existing obligations of Term Contracts with Aramco and ADNOC. However, in order to uplift Russian Crude Oils on regular basis, we may have to reduce our contractual volumes in the medium to long term.

Payment Methodology Confirmed Letter of Credit (L/C) in USD from first class bank will be required for payments.

The morons fell for the cheap US trick of dumping LNG on the EU market at way below cost. It was an obvious
political move, but EU-tards were too retarded to catch on. They only have "IQ" when it comes to Russia.

Ask the clintons.