Pakistan abandons Russian oil deal as import via SPV involves high risks.

The Pakistani government has decided to shelve its plans for a long-term oil import deal with Russia under a government-to-government (G2G) arrangement. Instead, it has now allowed local refineries to pursue direct commercial agreements with Russian companies. This decision comes after delays in establishing a Special Purpose Vehicle (SPV) for crude oil imports, which was part of the original G2G agreement between Pakistan and Russia.

The move to establish the SPV was intended to facilitate the import of Russian crude oil, which would then be processed by local refineries. However, following a recent visit by a Pakistani delegation to Moscow, it was decided to put the SPV plan on hold due to the perceived high risks involved in this approach.

Previously, Pakistan Refinery Limited (PRL) imported a vessel carrying Russian oil, a process that took approximately one month for the oil to reach Pakistan's shores. This lengthy process raised concerns about the feasibility and efficiency of importing Russian crude via the SPV. Private-sector refinery Byco also imported a 100,000-ton oil consignment from Russia, further prompting the government to reconsider its G2G deal with Russia.

According to sources, Pakistan's oil refineries are now engaged in direct talks with Russian companies for crude oil imports based purely on commercial terms. Before the Pakistani delegation's visit to Russia...