“Cheap” Russian Oil: Some Uncomfortable Truths

If you are paying Rs.282 per litre for “Arab” petrol, what will you pay per litre for “Russian” petrol? Can you tell?

While the subsidized petrol scheme for some motorists and motorcycle riders is turning out to be a failure, there is hope that cheap Russian oil may soon be available. Despite Russia’s silence, various Pakistani government officials have assured the public that discounted Russian oil will arrive in Pakistan in May 2023. It remains unclear whether it will be available at petrol stations in May. Moreover, there are some unknown factors about Russian oil that cast doubt on the government’s claims of its cheapness.

What We Do Know About the Russian Oil

Pakistan will be importing Russian crude, not refined oil. This means that the consignment will first be refined in local refineries, but it is currently unknown how long this process will take and what the cost will be. As a result, the availability of Russian oil at petrol pumps may be delayed. Pakistan Refinery Limited (PRL) will initially refine Russian crude on a trial basis, and if successful, other refineries such as Pak-Arab Refinery Limited (PARCO) will join in later. However, if the experiment isn’t successful, it is uncertain what the next course of action will be.

What We Do Not Know About the Russian Oil

The government keeps claiming that it has struck gold with the purchase of Russian oil at discounted rates. However, the exact discount rate is unknown. Additionally, it is unclear which currency was used to finalize the deal, whether it was in US Dollars, Russian Rubles, Chinese Yuan, or some other currency.

What the Government Wants to Achieve With Cheap Russian Oil?

With elections looming and not much to show in terms of performance, the government is desperate to provide some sort of relief to the masses in the hope of winning the upcoming general elections. The availability of cheap Russian oil provides an excellent opportunity, but only if this experiment works.

Pakistan largely satisfies its energy needs from the Gulf and Middle Eastern countries such as Saudi Arabia, Kuwait, and the U.A.E. Pakistan hopes to import 100,000 barrels per day (bpd) from Russia, while the country’s current daily requirement is over 500,000 bpd. If the Russian experiment goes through, it would mean less reliance on Middle Eastern oil, which also has the potential to jeopardize Pakistan’s long standing relations with these countries.

Should the Prospects of Cheap Russian Oil Make Us Happy?

While it is generally true that saving money can make us happy, it is important to consider all factors involved. Cheap Russian oil may help the cash-strapped government and inflation-hit public, but we should also consider the potential environmental and political impacts. As this is an experiment, it could pass or fail. Let’s hope that it passes with flying colors without any unintended consequences.

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