VLCC

Pakistan’s largest refiner Cnergyico is increasing its purchases of US crude oil as the country seeks to diversify energy supplies after disruptions linked to the Iran war exposed its heavy reliance on Gulf shipping routes. Cnergyico, which first started importing US crude last year, is considering additional spot purchases alongside longer-term supply contracts with Vitol and other suppliers. Vice Chairman Usama Qureshi told Reuters that the company would assess purchases based on pricing, reliability and supply security. The move comes as Pakistan looks to reduce the risks associated with relying heavily on a single region for energy imports. The disruption caused by the conflict has highlighted the vulnerability of Pakistan’s oil and liquefied natural gas (LNG) supply chains, particularly because a large share of these shipments normally passes through the Strait of Hormuz. Cnergyico Imports 8.1 Million Barrels Of US Crude Cnergyico has imported approximately 8.1 million barrels of US crude over nine months, according to Qureshi. Of this total, around 7.1 million barrels worth approximately $750 million were imported during the fiscal year that ended in June. The company’s purchases represent a significant portion of the increase in Pakistan’s imports from the United States. According to central bank data, Pakistan’s payments for US imports increased by $914 million to $3.27 billion during the fiscal year. Cnergyico’s US crude purchases therefore accounted for roughly 80% of the increase in Pakistan’s import payments from the US. The growing crude purchases could help Pakistan increase bilateral trade with Washington while also providing the country with another source of oil supplies. Pakistan Seeks More US Imports Pakistan is also seeking to increase imports from the United States as part of broader efforts to manage its trade relationship with Washington. Higher purchases from the US could help narrow Pakistan’s trade surplus with the country and potentially support Islamabad’s efforts to secure lower trade tariffs imposed by US President Donald Trump. The government has been looking for ways to increase commercial ties with the United States while securing better market access for Pakistani exports. Cnergyico could further increase its purchases of US crude if Pakistan’s proposed EXIM Bank trade-finance facility becomes available to the refiner, Qureshi said. Pakistan proposed the facility last month to enable Pakistani buyers to defer payments to US exporters for as long as three years. Such financing could make larger crude purchases more manageable for local refiners and improve their ability to diversify suppliers. Gulf Routes Remain Critical Pakistan currently relies heavily on Saudi Arabia and the United Arab Emirates for its oil supplies. Before the recent disruptions, around 90% of Pakistan’s oil and LNG imports passed through the Strait of Hormuz, making the route critical to the country’s energy security. The Iran conflict and resulting disruption have increased concerns over the reliability of the route. Any prolonged disturbance can affect shipping schedules, insurance costs, freight rates and the availability of energy supplies. Pakistan has therefore been exploring alternative supply arrangements. One option under consideration is importing Saudi crude through Yanbu, a major port on Saudi Arabia’s Red Sea coast. The route could provide an alternative to shipments that normally travel through the Strait of Hormuz. Cnergyico Plans $1.2bn Refinery Upgrade Cnergyico is also evaluating infrastructure investments to strengthen its ability to handle crude and refined products. The company is considering the development of a second offshore mooring connected to its storage network. The facility would allow the refiner to import crude and export refined products using large tankers outside Karachi’s congested port facilities. The proposed infrastructure forms part of Cnergyico’s broader $1.2 billion refinery upgrade. The upgrade is expected to help the company meet Euro V fuel standards, reduce furnace-oil production and increase refining capacity to approximately 200,000 barrels per day. A second offshore mooring could also improve the efficiency of crude imports and refined-product exports by reducing dependence on constrained port infrastructure. US Crude Could Lower Shipping Costs Industry analysts believe greater access to US crude could provide logistical benefits for Pakistan. Fawad Basir, head of research at KTrade Securities, said the disruptions in the Middle East had demonstrated the risks associated with dependence on a single supply route. According to Basir, using Very Large Crude Carriers (VLCCs) to transport US crude could reduce freight costs by approximately 25% to 30%. The use of larger vessels could allow refiners to transport greater volumes per shipment, potentially reducing transportation costs per barrel. A second Single Point Mooring (SPM) could also accelerate vessel turnaround times by allowing tankers to load or unload crude offshore rather than relying entirely on existing port facilities. Pakistan Seeks Greater Energy Security The shift toward US crude comes as Pakistan faces rising fuel costs and growing pressure to secure reliable energy supplies. Higher petroleum prices have already increased pressure on households and businesses, while protests over inflation and fuel costs have emerged in the country. For Pakistan, diversifying crude suppliers could provide greater flexibility during future disruptions. However, US crude purchases will also depend on international oil prices, freight costs, financing arrangements and the compatibility of different crude grades with local refineries. Cnergyico’s growing purchases suggest that US crude could become a more important component of Pakistan’s energy supply mix. The refinery’s proposed infrastructure expansion, combined with alternative supply routes and greater access to international crude markets, could help Pakistan reduce its exposure to disruptions around the Strait of Hormuz. The strategy also supports Islamabad’s broader effort to strengthen economic ties with Washington while addressing the country’s energy security challenges.