In the wake of escalating tensions in the Middle East and a sharp increase in global oil prices, Pakistan’s Federal Minister for Petroleum, Ali Pervaiz Malik, has firmly rejected proposals to import crude oil from Russia. This announcement comes as international oil prices have surged beyond the $100 per barrel mark, largely influenced by the ongoing conflict involving Iran, Israel, and the United States. The geopolitical unrest has sent shockwaves through global energy markets, prompting Pakistan to reassess its fuel procurement strategies.
Recently, the Pakistani government announced a substantial hike in fuel prices, raising the cost of petrol and diesel by Rs55 per litre. Under the revised pricing structure, petrol now stands at Rs321.17 per litre, while diesel has seen an even steeper increase, climbing from Rs275.70 to Rs335.86 per litre. These adjustments are directly linked to the rising international oil costs, which have been exacerbated by the disruption of supply routes and heightened uncertainty in the Middle East region.
In response to the crisis, various sectors within Pakistan have advocated for the importation of Russian crude oil, especially after Iran’s effective blockade of shipping through the Strait of Hormuz—a critical chokepoint responsible for nearly 20 percent of the world’s oil supply. However, Ali Pervaiz Malik highlighted several significant obstacles that make Russian crude an impractical choice for Pakistan’s energy needs. He emphasized that financial constraints and technical challenges play a major role in this decision.
One of the key issues Malik pointed out is the nature of Russian Urals crude, which is classified as a heavy crude oil. Most of Pakistan’s refineries, with the exception of the Pak-Arab Refinery Company (PARCO), operate as older hydroskimming facilities. These refineries are not designed to efficiently process heavy crude, which results in an excessive production of furnace oil—a byproduct that is less desirable and more polluting. The minister explained that this furnace oil is subject to a carbon levy imposed under the International Monetary Fund’s (IMF) Resilience and Sustainability Facility (RSF), reflecting its environmental impact.
Malik elaborated that this carbon levy significantly alters the economic feasibility of importing Russian crude, as the additional costs undermine the commercial viability of such transactions. He further mentioned ongoing discussions with the IMF, where Pakistan is urging for the removal of these levies on fuels under both the RSF and the Extended Fund Facility (EFF). The goal is to enable the country to diversify its fuel consumption and better manage challenges in the domestic gas sector.
Adding to the complexity, Malik revealed that liquefied natural gas (LNG) supplies from Qatar have recently been suspended, which has intensified the pressure on Pakistan’s energy infrastructure. As a result, the government is exploring alternative options, including the increased use of furnace oil for electricity generation to meet the country’s growing power demands. Despite these efforts, the minister reiterated that importing Russian crude remains commercially unfeasible due to the outdated nature of Pakistan’s refining capabilities.
In summary, while the idea of sourcing Russian crude oil has gained traction amid the current global energy crisis, Pakistan’s petroleum minister has made it clear that technical, financial, and environmental factors make this option impractical at present. The government continues to navigate a challenging landscape marked by volatile oil prices, geopolitical tensions, and domestic energy shortages, striving to find sustainable solutions that balance economic viability with energy security.
