US President Donald Trump says that “one day Pakistan will sell oil to India”, it seems ridiculous to hear and it is practically impossible. There are many solid reasons behind this. For example, Pakistan itself is almost completely dependent on imports in terms of crude oil. Its domestic production is extremely low and a large part of the energy needs rests on imports coming from the Middle East or now America. In such a situation, Pakistan does not have surplus oil production which it can export.
In addition, Pakistan’s refining capacity is limited and currently it is struggling in fully fulfilling its domestic demand. It is impossible to export oil without new refining units and export-oriented infrastructure. At the same time, political and security relations between India and Pakistan for decades are so tense that important steps like energy trade are not possible immediately. Trade between the two countries has been closing several times, so the export of strategic items like oil is also impossible from political point of view. In addition, Pakistan’s economy is currently facing a serious crisis. Given the lack of dollar reserves, increasing trade deficit and inflation, it is unable to bear the expenditure on energy imports, the idea of export is far -fetched.
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If seen, Trump’s statement can be seen as an optimistic or political rhetoric, but the ground reality is that selling oil to India in Pakistan’s current economic, technical and political conditions is not possible in the near future. For this, Pakistan will not only have to increase its energy self-sufficiency, but will also have to make unprecedented improvements in relations with India, which is impossible.
What are the benefits of Pakistan to the deal with America?
At the same time, if the deal of Pakistan has been done with America in the context of Pakistan, then it will definitely benefit from it. The oil deal with the US can provide important opportunities for Pakistan on both energy and diplomatic levels. The biggest advantage for Pakistan is that Pakistan will now get diversity in sources of crude oil. Till now, Pakistan used to import almost entire oil from the Middle East, so that its energy crisis could deepen its energy crisis when there was any obstruction in the supply. The import of American crude oil will reduce this dependence and provide new supply options.
The second major benefit is related to energy security. Let us tell you that American WTI (West Texas Intermediate) crude oil is in line with Pakistan’s refining capacity and will not require any additional technical change. This will not increase pressure on refining costs and energy availability will remain stable at the domestic level. From a diplomatic point of view, this deal also indicates improvement in America-Pakistan relations. Better relations with the US can open new opportunities for global trade and investment for Pakistan. Also, this deal can help Pakistan get the US political and financial assistance, especially when the country is facing economic challenges.
If this import deal is commercially successful, Pakistan will be able to import American crude oil regularly every month. This will increase the availability of energy in the domestic market, positively affect the import bill and there will be long stability in the energy sector. If seen, this oil deal is not only an opportunity for Pakistan to secure energy supply but is also a sign of new strength in relations with America. However, it will get full benefit only when Pakistan can turn it into a long -term strategy and balance domestic production and demand.
Pakistan is preparing to bring oil from America
On the other hand, after the oil deal between Pakistan and the United States, Pakistan’s largest refining company Cnergyico has also announced the import of 1 million barrels (1 million) crude oil from the US energy company Vitol in October. Company vice -president Usama Qureshi said that this would be Pakistan’s first import of American crude oil, which has been possible after a recent historic trade agreement.
According to Usama Qureshi, it is a test cargo of American West Texas Intermediate (WTI) Light crude, which will leave Houston this month and reach Karachi in the second fortnight of October. He said that if this import proved to be commercially beneficial and the supply remained stable, then the company may consider importing at least one cargo every month. This consignment will only be for domestic processing and not for the resale.
Let us also remind you that Pakistan’s finance and petroleum ministries encouraged local refineries to find options for American crude oil after threats to increase fees in April. Let us tell you that Pakistan is completely dependent on others in terms of oil. The price of its oil import in FY 2024-25 was $ 11.3 billion, which is about 20% of the total import bill.
Let us tell you that Cnergyico currently has the ability to process 1,56,000 barrels of crude oil per day and operates the country’s only single-point mooring terminal near Karachi, which can handle large tankers. The company is planning to install second offshore terminals and upgrade its refinery over the next five-six years. Due to sluggishness in local demand, the company is currently working at a capacity of 30-35%, but Qureshi hopes that the production rate will be increased if domestic demand and priority to local production.
However, this first import of American crude oil by Pakistan is considered a decisive step towards diversification of energy sources, reducing dependence on Middle East and improving relations with the US. This is a big opportunity for Cnergyico, as it will not only protect energy supply, but can also increase production capacity when domestic demand in future. This step can create new equations in the energy and diplomatic landscape of South Asia. But overall, there is no possibility that Pakistan will sell oil to India one day.
-Niraj Kumar Dubey