Business

Pakistan-Russia final crude oil import talks start today in Karachi

Published

1 year ago

Farwa

PSO has been nominated on behalf of Pakistan for talks.
Russia’s PSC has been nominated for the talks by Moscow.
The PSC delegation arrived in Karachi on Monday.

ISLAMABAD: A Russian technical delegation will hold talks today (Tuesday) with Pakistan State Oil (PSO) officials in Karachi, to give final touches to a crude oil import deal at a government-to-government level (GtG), a senior Energy ministry official told The News.

“In case of successful talks, both the state-owned nominated companies will sign the commercial agreement the next day (March 22),” said the official who spoke on the condition of anonymity.

PSO has been nominated as the state-owned company on behalf of Pakistan for talks and signing of the Russian crude oil import deal. The Operational Services Center (PSC), which is a state-owned company of Russia, has been nominated for the talks by Moscow.

The PSC delegation arrived in Karachi on Monday.

Both the PSC and PSO may ink the deal, as the delegation from Moscow will hold talks on March 21-22.

“The current price of Brent crude has come down to $73 per barrel whereas the Russian crude oil price remained at $52 in February 2023, which has further lowered between $42-48 in the international market,” sources within the industry told the publication.

They urged Pakistan refineries to purchase Russian oil on their own in compliance with the G7 countries’ regulations. However, the government is trying to secure a GtG deal below the $60/barrel price cap imposed by G7 countries.

Under the GtG deal, Petroleum Division wants to lock the deal at close to $50/barrel, $10/barrel below the cap price. The G7 countries had imposed a price cap on Russian oil in the wake of the war on Ukraine.

Some official sources say that Russia wants to confirm if Pakistan really wants to purchase its crude as there is no written direction from Pakistan’s top man to purchase the Russian crude. However, Pakistani officials are exploring options to purchase crude from Moscow under the direction of Pakistan’s prime minister.

“So far Russia has not indicated what discount it will offer.”

The Russian side will finalise with PSO all the prerequisites before inking an agreement that includes the mode of payment, shipping cost with premium, and insurance cost. The officials said that Russia’s PSC may offer a discount on the base price in its talks with the PSO’s technical team.

They added that the shipping of crude oil from Russian ports would take 30 days and an additional per barrel transportation cost would be $10-15/barrel.

The government does not want to divulge the mode of payment to Russia against the import of crude oil. However, the authorities are weighing their options to either use Pakistan National Shipping Corporation ships for transporting crude from the Russian port or to use the Russian tankers.

“We also have to keep in mind the landed cost of Russian crude as the crude vessel will arrive in 30 days, owing to which per barrel shipping cost would hover at $10-15,” the official said, adding that Moscow has not agreed on the discount yet. “We fear that the maximum discount would be offset by the shipping cost of the crude oil.”

However, State Minister for Petroleum Musadik Malik in a televised presser said that Pakistan would get a 30% discount on crude oil prices. Malik, while talking on Geo News programme Capital talk last week, said 80-85% of negotiations with Russia were completed.

“Our commercial deal is in the final stages, and by the month of March the entire commercial deal will be negotiated,” he said. “In April, we will give them the first shipping order. The first cargo of crude oil from Russia will arrive in by the end of April,” the state minister said.

The minister revealed that the country would receive one-third of its crude oil imports from Russia at a concessional rate “the impact of which will be translated to the people.”

“The first crude oil vessel from Russia will arrive at the end of next month of April as a test cargo to assess the landed cost of crude as compared to the cargo Pakistan gets from ADNOC and Saudi Aramco. Pakistan has sought a 30% discount in Russian crude base price.”

In case, the test ship’s cost is found low enough to bring down the prices of petroleum products, Pakistan would give a green signal for the import of Russian oil in a month which may be 2-4 cargos.

Since Pakistan is facing a US dollar liquidity crunch, it would pay Russia in the currencies of friendly countries that include China, Saudi Arabia, and UAE. The officials said that the ship carrying Russian crude will have the NICL’s (National Insurance Company Limited) insurance and Pakistan Reinsurance Company Limited (PakRE) will reinsure the asset (ship with crude oil).

The State Bank of Pakistan, which earlier showed hesitance for any transaction with Russian banks keeping in view the G7 regulations and the US and EU countries, has now shown a willingness to talk with the Russian counter bank over a payment mechanism for oil import in three currencies other than dollars.

Business

In intraday fluctuations, the rupee achieves a slight gain against the US dollar.

Published

19 hours ago

Farwa

The Pakistani rupee rose 0.04% versus the US dollar during early trading hours on Tuesday in the interbank market.

At 10 a.m., the rupee stood at 278.12 against the US dollar, up Re0.12 from the previous day’s finish of 278.24, which had seen a small decrease of Re0.03.

In a momentous development, Saudi Crown Prince Mohammed bin Salman is scheduled to visit Pakistan next week for important talks with Pakistani leaders.

These talks are scheduled to feature the signing of multiple Memoranda of Understanding (MoUs) targeted at increasing Saudi investment in industries such as agriculture, mining, human resources, energy, chemicals, and shipping.

On the global front, the US dollar rose against the yen on Tuesday, as huge interest rate differentials weighed on the Japanese currency.

The US dollar climbed 0.22% to 154.235 yen in early Asian trading, adding to its 0.58% rise the day before. On Friday, the yen fell to its lowest level since April 10, weighed down by softer-than-expected monthly US jobs data and signals of likely Bank of Japan action.

Meanwhile, oil prices rose slightly after Israeli strikes on Rafah in Gaza, amid continued talks with Hamas over a truce. Brent crude prices increased 0.28% to $83.56 per barrel at 0400 GMT, while US West Texas Intermediate (WTI) crude futures rose 0.31% to $78.72 a barrel.

This increase comes after a reversal of last week’s slump, during which both contracts suffered their worst weekly losses in three months, fueled by fears about disappointing US job statistics and speculation about the timing of a Federal Reserve rate decrease.

Business

Saudi investment and falling inflation cause Pakistani stocks to soar.

Published

2 days ago

Farwa

The benchmark KSE-100 Index increased by more than 1.50 percent on Monday, driven by the possibility of significant Saudi investment. Investors are now more optimistic that the central bank will soon begin a cycle of interest rate cuts, and another IMF programme is very much on the horizon.

The KSE-100 Index increased by 910.25 points, or 1.27 percent, by 1:29 pm PST to close at 72,812.34, having reached an intraday high of 73,060.74.

Additionally, on Monday, Ibrahim Al Mubarak, the deputy minister of investments for Saudi Arabia, stated that his nation preferred Pakistan’s economic growth and thought it was the best place to make investments.

The news is definitely good for equities that have been cheap since their market capitalization peaked in 2017, as many industries—energy, agriculture, technology, and mining being the primary ones—can now attract much-needed foreign investment.

The inflation of Pakistan

The consumer price index (CPI) for April increased by 17.3 percent, the lowest level since May 2022. This led to the benchmark index rising by 1244.45 points, or 1.76 percent, during the last session on Friday of last week.

This indicates that, like in March, annual inflation declined for the fourth straight month in April and stayed below the current record high interest rates of 22 percent. like a result, the State Bank of Pakistan may decide to begin reducing interest rates at its upcoming meeting on June 10.

While the pattern seen on Friday was also influenced by a market correction, the persistence of this most recent upswing indicates that investors are anticipating an economic recovery in the context of falling inflation and impending Saudi Arabian investment.

IMF APPEAL

In the meantime, the IMF continues to play a significant role in Pakistan, influencing not just public policy but also private sector initiatives and the lives of common citizens. Furthermore, the market was undoubtedly helped by the world’s largest lender’s most recent announcement of the upcoming transaction negotiations.

The Bretton Woods Institution said on Sunday that a delegation was scheduled to visit Pakistan this month to talk about a new initiative, prior to Islamabad starting the annual budget-making process for the upcoming fiscal year.

Although Pakistan’s $3 billion short-term programme helped prevent a sovereign default last month, Prime Minister Shehbaz Sharif’s administration has emphasised the necessity for a new, longer-term initiative.

The IMF responded to Reuters via email, saying that a mission is anticipated to visit Pakistan in May to review the FY25 budget, policies, and reforms under a proposed new programme for the wellbeing of all Pakistanis.

MERCURABLE BY SAMPLE

Meanwhile, it has been claimed that Saudi Crown Prince Mohammed bin Salman would pay a visit to Pakistan later this month. The kingdom has been making massive investments all over the world in an effort to become a more significant player in world affairs.

It makes sense that after years of political unrest and economic hardship, his presence and the Saudi investment will aid Pakistan in establishing itself as a desirable location for investors.

The explanation is straightforward: Saudi Arabia continues to be a significant actor in world politics. Nonetheless, the globe has begun to view MBS, the crown prince’s nickname, as a role model due to his policies of diversifying his nation’s economy and elevating the kingdom to a centre of commerce.

Business

Saudi investment is most suited for Pakistan, according to Ibrahim Al-Mubarak

Published

2 days ago

Farwa

Ibrahim Al Mubarak, the deputy minister of investments for Saudi Arabia, stated on Monday that his nation thought Pakistan was the best place to invest and wanted to see it flourish economically.

Speaking at the opening ceremony of the two-day Pakistan-Saudi Arabia Investment Forum 2024 in Islamabad, he stated that Saudi entrepreneurs were open to making investments in a variety of industries and that a significant portion of Pakistanis were contributing significantly to the growth of the kingdom.

ON THE DRIVING SEAT: PRIVATE SECTOR

Muhammad Aurangzeb, the finance minister, stated in his speech that the private sector should take the “driving seat” in order to revitalise the economy.

The finance minister stated, “The ministers and bureaucracy would have to lay back,” adding that the role of the government was to establish a framework.

According to Aurangzeb, the finance ministry was always there to support traders and company owners as he pursued economic reforms as part of the government’s objective.

Using the better rupee exchange rate as an example, he claimed that successful policies were bringing about economic stability.

The minister also mentioned that the government was trying to draw in foreign investment, but he also emphasised the need for continued policies to maintain economic stability and urged collaboration between the public and private sectors to build a robust economy.

Investing in Saudi Arabia

A high-level group of 50 Saudi businesspeople and investors, together with government representatives, arrived in Pakistan earlier on Sunday to attend an event aimed at encouraging investment from the oil-rich Gulf State.

Continue reading: Saudi entrepreneurs arrive in Islamabad as Pakistan seeks foreign investment

This happened only a few days after Saudi Arabia hosted Prime Minister Shehbaz Sharif for a Special Meeting on Global Collaboration, Growth, and Energy for Development in Riyadh. During his visit, he also had talks on a number of topics with Crown Prince Mohammed bin Salman.

SUMMARY CONVERSATIONS

The audience was informed by Commerce Minister Jam Kamal that every attempt would be made to facilitate international investors and have fruitful discussions between Pakistan and Saudi Arabia.

Representatives from thirty Saudi firms made the comments while in Pakistan looking for opportunities to engage in a range of industries, such as agriculture, aviation, human resources, and minerals.

Islamabad has been depending on Saudi investment to spark economic activity in the nation, which will not only boost investor confidence domestically but also aid in persuading businessmen from other countries to prioritise Pakistan, given that the country’s economy is crippled by inflation and high interest rates.

Not a shortage of proficient labourers

In his speech, Saudi Arabia’s Minister of Petroleum, Musadik Malik, emphasised the country’s recent rapid progress as well as the necessity of deepening the two countries’ already-existing bilateral relations.

He claimed that Gwadar would soon become a global transit hub and that Pakistan possessed abundant mineral riches. Malik assured the audience that Pakistan did not lack skilled labour.

It’s a narrative in progress. Details will be provided later.