Pakistan refiner Cnergyico seeks more US crude amid energy supply disruptions

Pakistan’s largest oil refiner, Cnergyico, is looking to increase its purchases of US crude as the disruption caused by the Iran war prompts Islamabad to diversify energy supplies and reduce its reliance on Gulf shipping routes, Reuters reports.

Cnergyico Vice Chairman Usama Qureshi told the wire service that the refiner, which began importing US crude last year, was also weighing spot purchases in addition to longer-term supply arrangements with Vitol and other suppliers.

He said the company would make purchasing decisions based on price, reliability and security of supply.

Cnergyico has imported around 8.1 million barrels of US crude over the past nine months, including 7.1 million barrels worth about $750 million during the fiscal year that ended in June, Qureshi said.

Pakistan’s payments for imports from the US rose by $914 million to $3.27 billion during that fiscal year, according to central bank data. Cnergyico’s US crude purchases therefore accounted for about 80% of the increase.

The refiner could further expand its US crude purchases if it gains access to a proposed EXIM Bank trade-financing facility, Qureshi said. Pakistan proposed the facility last month to allow local buyers to defer payments to US exporters for up to three years.

Pakistan traditionally sources most of its oil from Saudi Arabia and the United Arab Emirates, with roughly 90% of its oil and liquefied natural gas imports previously passing through the Strait of Hormuz.

The disruption to regional energy supplies has increased pressure on Islamabad, particularly as fuel costs rise and protests over inflation and petroleum prices have intensified. Pakistan has also explored alternative supply routes, including Saudi crude shipments through Yanbu on the Red Sea.

Cnergyico is meanwhile considering the construction of a second offshore mooring connected to its storage facilities. The proposed facility would allow large tankers to load and unload crude and refined products outside Karachi’s congested ports.

The project forms part of a $1.2 billion refinery upgrade aimed at meeting Euro V fuel standards, reducing furnace-oil production and increasing refining capacity to around 200,000 barrels per day.

KTrade Securities research head Fawad Basir said the disruption in the Middle East had exposed the risks associated with dependence on a single supply route.

He added that transporting US crude in Very Large Crude Carriers could reduce freight costs by 25% to 30%, while a second Single Point Mooring could improve vessel turnaround times.