KARACHI: Pakistan’s largest refiner Cnergyico is buying more US crude as Islamabad seeks to diversify the country’s energy supplies after disruption caused by the Iran war exposed its dependence on Gulf routes.
Pakistan also wants to increase imports from the US to help narrow its trade surplus and secure reductions in trade tariffs imposed by President Donald Trump.
Cnergyico, which first bought US crude last year, is also considering spot purchases against longer-term contracts with Vitol and other suppliers based on “pricing, reliability and supply security”, Vice Chairman Usama Qureshi told Reuters.
Cnergyico imported about 8.1 million barrels of US crude over nine months, including 7.1 million worth about $750 million in the fiscal year ended June, Qureshi said.
Refiners’ purchases lead US import increases
Pakistan’s US import payments rose by $914 million to $3.27 billion in that fiscal year, central bank data shows, making Cnergyico’s purchases equivalent to about 80% of the increase.
The refiner could increase US crude purchases if Pakistan’s proposed EXIM Bank trade-finance facility is extended to it, Qureshi said. Islamabad pitched the facility last month to allow Pakistani buyers to defer payments to US exporters for up to three years.
Pakistan mainly imports oil from Saudi Arabia and the United Arab Emirates, with about 90% of its oil and liquefied natural gas imports passing through Hormuz before the war.
Rising fuel costs have put pressure on the Pakistani government to act, as a new round of protests against inflation and fuel prices erupted this week. Islamabad has also sought alternatives including Saudi crude via Yanbu, located on Saudi Arabia’s Red Sea coast.
Qureshi added that Cnergyico was evaluating a second offshore mooring linked to its storage network to import and export refined products on large tankers outside Karachi’s constrained ports, as part of a $1.2 billion upgrade to meet Euro V standards, cut furnace-oil output and expand capacity to about 200,000 barrels per day.
Fawad Basir, head of research at KTrade Securities, said Middle East disruptions highlighted the risks of relying on a single supply route. Using Very Large Crude Carriers for US crude could cut freight costs by 25% to 30%, while a second Single Point Mooring would speed vessel turnaround.
