Pakistan's infrastructure issues and cash flow hamper import of Russian crude
The cash-strapped country became Russia's latest customer snapping up discounted crude that has been banned from European markets due to Russia's war on Ukraine
By Eastern EyeAug 03, 2023
PAKISTAN is unlikely to meet a target for Russian crude to make up two-thirds of its oil imports, despite attractive prices, hampered by a shortage of foreign currency and limitations at its refineries and ports, officials and analysts say.
The cash-strapped country became Russia’s latest customer snapping up discounted crude that has been banned from European markets due to Russia’s war on Ukraine. Its first cargo arrived in June and a second is now under negotiation.
It is targeting 100,000 bpd of imports from Russia, compared with the total 154,000 bpd of crude it imported in 2022, in the hopes that will lower its import bill, address a foreign exchange crisis and keep a lid on record high inflation. However, the benefits are being offset by increased shipping costs and lower quality refined products compared with the fuels produced with crude from Pakistan’s main suppliers, Saudi Arabia and the United Arab Emirates.
Pakistan will have to increase gasoline and gasoil imports to make up for the lower output of these fuels from the Russian crude, leading to more dollar outflows and stress on its crisishit economy, said Shahbaz Ashraf, chief investment officer at Pakistan-based FRIM Ventures.
While Islamabad and Moscow have not disclosed pricing details and the extent of discounts, a shortage of Chinese yuan currency to pay for Russian crude poses another hurdle, as it needs the yuan for trade with China, its top trade partner.
Pakistan paid for its first Russian crude cargo in Chinese yuan. However, Aadil Nakhoda, assistant professor at Karachi’s Institute of Business Administration, said it would be better for the country to use a barter deal with Russia than paying with yuan, which traders say is in short supply. “How will it pay other lenders and how will it finance trade with China if it uses the low yuan reserves to pay for Russian oil?” Nakhoda said.
Adding to the challenges, transportation costs for Russian crude are higher than for Middle Eastern crudes not only because of the longer distance travelled, but because Pakistan’s ports cannot handle the large vessels departing Russia.
Urals crude had to be transferred from a supertanker on to smaller ships, known as a lightering operation, in Oman before heading to Pakistan, government officials said, unlike direct shipments from the Middle East.
Even with that extra cost, it was worth importing Russian oil, said Viktor Katona, lead crude analyst at Kpler, as Saudi Arab Light crude is $10 (£8) to $11 (£9) per barrel more expensive for Pakistani refiners than Urals, while lightering operations add around $2 (£1.56) to $3 (£2.3) per barrel. “Pakistani buyers would still be much better off,” he said.
However, Urals quality is a deterrent, as Pakistan’s refineries cannot get as much gasoline and diesel out of Urals crude as they produce from Saudi and UAE crudes. It will take Pakistan Re[1]finery Ltd (PRL) at least two months to fully process its first cargo of 100,000 metric tons (730,000 barrels) of Urals crude as it needs to be blended with Middle East crude to offset the high output of fuel oil from the Russian oil, Zahid Mir, chief executive of the state-run refiner, told Reuters.
“Our optimum processing solution is to blend Urals with Middle Eastern imported crude while not exceeding 50 per cent Ural in the blend,” Mir said.
The residual fuel produced from Urals crude has to be mixed with diesel and kerosene to meet specifications for local use while the remainder is exported, but the deal was still commercially viable for Pakistan, Mir said. PRL has no plans to upgrade its refinery to process fuel oil into higher quality fuels, he added.
Kpler’s Katona expects Pakistan’s liquidity issues and technical challenges to weigh on its appetite for Russian crude.
“Russian imports into Pakistan will not grow into anything bigger than one cargo per month,” he said. (Reuters)
Local councils now face four “nationally significant” cyber attacks weekly, putting essential services at risk.
Cyber-attacks cost UK SMEs £3.4 billion annually, with the North West particularly affected.
Experts recommend proactive measures including supplier monitoring, threat intelligence, and an “assume breach” mindset.
Cyber threats escalate
Britain’s local authorities are facing an unprecedented surge in cyber threats, with the National Cyber Security Centre reporting that councils confront four “nationally significant” cyber attacks every week. The escalation comes as organisations are urged to take concrete action, with new toolkits and free cyber insurance through the NCSC Cyber Essentials scheme to help secure their foundations.
Recent attacks on major retailers including Marks & Spencer, Co-op and Jaguar Land Rover have demonstrated the devastating impact of cyber threats on critical operations. Yet councils remain equally vulnerable, with a single successful attack capable of rendering essential public services inaccessible to millions of citizens.
The stakes are extraordinarily high. When councils fall victim to cyber attacks, citizens cannot access housing benefits, pay council tax or retrieve crucial information. Simultaneously, staff are locked out of email systems and case management tools, halting service delivery across social care, police liaison and NHS coordination.
Call for cyber resilience
According to Vodafone and WPI Strategy’s Securing Success: The Role of Cybersecurity in SME Growth report, cyber-attacks are costing UK small and medium-sized enterprises an estimated £3.4 billion annually in lost revenue. Over a quarter of SMEs surveyed stated that a single attack averaging £6,940 could force them out of business entirely. This financial impact is particularly acute in the North West, where attacks cost businesses nearly £5,000 more than the national average.
Renata Vincoletto, CISO at Civica, emphasises that councils need not wait for legislation to strengthen their cyber resilience. She outlines five immediate priorities: employing third-party continuous monitoring tools to track supplier security compliance; subscribing to threat intelligence feeds from the NCSC and sector experts; engaging with regional cyber clusters supported by the Department for Digital, Culture, Media and Sport and the UK Cyber Cluster Collaboration ( UKC3) establishing standardised incident reporting processes aligned with NCSC frameworks; and adopting an “assume breach” mindset to stay vigilant against inevitable threats.
“Cyber resilience is not a single project or policy it’s a culture of preparedness,” Vincoletto states. “Every small step taken today reduces the impact of tomorrow’s inevitable attack.”
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