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‘Cheap Russian crude lowers petrol by only Re1’

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  • If PARCO, NRL jointly refine Russian oil then benefit could go up to Rs3 per litre. 
  • Russia also squeezed discount to $5 per barrel at Platt price.
  • No company except PRL ready to refine, say authorities. 

ISLAMABAD: The Petroleum Division briefed caretaker Prime Minister Anwaar-ul-Haq Kakar on Russian crude’s impact on petroleum prices, saying that the maximum benefit is quite nominal of Re1 per litre of petrol and diesel, The News reported Friday. 

The division added that importing Russian crude involved two risks, including 30-36 days of transportation and 60% production of furnace oil that has to be exported at the rate of 75% of crude with a 25% loss.

No company except Pakistan Refinery Limited (PRL) is ready to refine the Russian oil, and if PRL is obliged to keep refining Russian oil, only Re1 relief can be passed on to consumers per litre of petrol, and diesel price.

The prime minister was also told that if PARCO and NRL jointly refine the Russian oil, the benefit could go up to Rs3 per litre again depending upon the volume of the Russian crude. 

PARCO, being comparatively the latest refinery and better plants will help increase the yields of Russian crude and reduce the production of furnace oil to some extent. However, PARCO and NRL have refused to refine Russian oil.

Russia has also squeezed the discount to $5 per barrel at Platt price against $15-$20 per barrel, the PM was briefed.

Brent price stands at $87 per barrel and against it, Russian crude has an existing price of $73 per barrel. The cost of Russian oil has crossed the cap price of $60 per barrel imposed by G7 countries and the import of Russian oil above the cap price will trigger problems on payments issue.

The decades-old PRL refined the heavy Russian crude URAL in almost three months by blending it with crude from the Middle East and local crude. The refinery adopted the strategy of refining by blending 45% URAL, 45% crude from the Middle East, and 10% local crude.

PRL is too old as it was incorporated in Pakistan as a Public Limited Company in May 1960. PRL is a hydro-skimming refinery designed to process various imported and local crude oil to meet the strategic and domestic fuel requirements of the country. 

The refinery has a capacity to process approximately 50,000 barrels per day of crude oil into a variety of distilled petroleum products such as motor gasoline, high-speed diesel, furnace oil, jet fuels, kerosene oil, and naphtha. Out of 100,000 URAL, PRL has produced 10% Mogas (petrol) 60% furnace oil and 10-15% high-speed diesel, and the remaining 15% other items. 

The official said that the furnace oil out of URAL has been produced 50% with high viscosity at 700cSt and PRL has to mix 10%v diesel in it to decrease its viscosity at 180 cSt so that it could flow. This is how the furnace oil production at 180 cSt escalates to 60% and diesel production is reduced by 10%. The net diesel production stands at 10-15% out of URAL. This means that out of 100,000 tonnes of URAL crude, the decades-old PRL has to export 60% URAL crude in the shape of furnace oil at 75% of crude with a 25% loss.

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Petrol prices are expected to experience another increase in Pakistan.

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The inflation-affected nation is expected to encounter another increase in petrol prices, with recommendations indicating a rise of Rs. 2.58 per litre for petrol and Rs. 5.91 per litre for high-speed diesel.

Sources indicate that, if sanctioned, petrol prices will ascend to Rs. 250.96 per litre, whereas high-speed diesel will be priced at Rs. 261.05 per litre.

Sources indicated that the suggested increase is due to the elevated premium on petroleum products in the worldwide market and rising import expenses.

The premium on imported petroleum products has increased, leading the government to contemplate pricing modifications effective November 16, sources indicated.

On October 31, the federal government published the prices of petroleum products for the upcoming fortnight, increasing the prices of petrol and high-speed diesel.

A notification announced an increase in petrol price by Rs 1.35, raising it to Rs 248.38 a litre. The price of high-speed diesel was fixed at Rs 255.14 per litre after an increase of Rs 3.85.

Also read: Pakistan’s weekly inflation jumps to 15.02pc

Simultaneously, the costs of light diesel and kerosene oil were reduced. The statement states that kerosene oil is priced at Rs 148.5 per litre following a reduction of Rs 4.92.

The cost of light fuel was reduced by Rs 2.61 to Rs 147.51 per litre.

The rampant hike in the prices came at the time when the weekly inflation, measured by the Sensitive Price Indicator (SPI), witnessed an increase of 0.28 percent for the combined consumption groups during the week ended on October 17, the Pakistan Bureau of Statistics (PBS) reported.

According to the PBS data, the SPI for the week under review in the above-mentioned group was recorded at 319.79 points as compared to 318.91 points during the past week.

In comparison to the same week last year, the SPI for the combined consumption group during the reviewed week experienced a 15.02 percent increase.

The weekly SPI with the base year 2015-16 =100 covers 17 urban centres and 51 essential items for all expenditure groups.

Likewise, SPI for the lowest consumption group of up to Rs 17,732 witnessed increase of 0.27 percent and went up to 313.74 points from last week’s 312.91 points.

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PIA Privatization Is Referred to the Cabinet Committee by the Privatization Commission Board Meeting

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The privatization of Pakistan International Airlines has been referred to a cabinet committee by the Privatization Commission Board.

Aleem Khan, the Federal Minister for Privatization and Communications, presided over the board meeting, which examined and accepted proposals on a number of topics, including the privatization of Pia.

The government would move forward with privatization in line with the law and in Pakistan’s best interests, Federal Minister Aleem Khan reaffirmed.

He added that the entire privatization process for the PITA and other state agencies would be expedited and simplified.

Following prequalification, the Privatization Commission is unable to remove any department or institution from Privatization, as was decided during the meeting.

Additionally, the Federal Minister directed that the pre-qualifying conditions and privatization be made more profitable.

Members of the Privatization Commission will be included in the Privatization Process through a three-member committee.

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Gas production from the Dera Bugti well commences at 5 MMSCFD.

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Dera Bugti, Balochistan is home to a freshly drilled well that the Oil and Gas Development Company Limited (OGDCL) has started producing gas from.

The natural gas output of Pakistan has been significantly boosted by this breakthrough.

A letter sent by OGDCL to the Pakistan Stock Exchange states that the well is generating five million standard cubic feet of gas each day, which is quite an astounding amount.

The Uch Gas Processing Plant has been effectively connected with the gas output, which will help distribute and streamline the increased gas supply. The Dera Bugti well is fully owned by OGDCL, the biggest exploration and production company in the country, as stated in its letter to the PSX.

In response to a decline in power demand, Pakistan opted to divert its imports of liquefied natural gas (LNG) to local users on November 12th.

This article also discusses Pakistan’s decision to use imported LNG for domestic use.

The Ministry of Petroleum has estimated that an amount of Rs163 billion will be necessary to fund the supply of LNG to households in the country. According to sources, the pressure on pipelines is continuously increasing due to the imported LNG.

Confirmation from reliable sources indicates that 600 MMcfd of LNG has been consumed by the power industry. Since captive power facilities are being shut down, there will be an excess of 150MMcfd of LNG, and the gas industry is also making 400 billion rupees from captive electricity.

To solve the problem of circular debt, the government intends to raise gas pricing and do away with the tariff differential between domestic gas and LNG imports.

There is a current tariff of Rs1,550 per MMcfd on domestic gas and Rs3,500 per MMcfd on imported LNG. The government hopes to earn Rs200 billion by removing this tariff difference. As a part of the larger strategy to raise government revenue, the tariff for fertiliser firms will also be hiked.

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