Desperate times: Iran offers 80,000 barrels of oil on 3-month credit

Will also provide $250 million for gas pipeline project.

ISLAMABAD:

Amid pressure from the United States, Iran has offered to export 80,000 barrels of oil per day to Pakistan on three-month deferred payments which may ease pressure on energy supplies due to the circular debt.

Earlier, Iran was exporting 45,000 barrels of crude oil per day to Pakistan on three-month credit but shipments came to a halt following US sanctions on Tehran which restricted banks from opening letters of credit.

Besides oil supply on credit, Iran also offered to provide $250 million financing for laying infrastructure of the Iran-Pakistan gas pipeline project, said Special Assistant to Prime Minister on Petroleum and Natural Resources Dr Asim Hussain while talking to the media after a meeting of the National Assembly Standing Committee on Petroleum and Natural Resources here on Tuesday.

However, Hussain said Pakistan had asked Iran to provide $500 million for the pipeline. Owing to US sanctions, even Pakistani institutions like Oil and Gas Development Company (OGDC) and National Bank of Pakistan (NBP) have refused to provide funds for the project.

A senior official of the petroleum ministry said oil import from Iran had been halted due to circular debt and not because of sanctions. “A meeting on circular debt will be held at the petroleum ministry on Friday to resolve the issue,” the official added.

Hussain said a Pakistani delegation would go to Iran next week to further discuss the crude oil supplies on credit. “The deferred payment facility should be forward-looking, otherwise the disparity between the rupee and dollar can hurt us,” he said, adding the State Bank of Pakistan would also be consulted before finalising the proposal.

The petroleum ministry is also working on a new refining policy to increase the country’s capacity. “Incentives will be provided to attract more investment to the sector,” Hussain said, adding the policy would make it mandatory for the refineries to have at least one hydrocracker.

Responding to a question on liquefied natural gas (LNG) imports from Qatar, he said Qatar had indicated an initial price of $15 to $16 per million British thermal units (mmbtu) which would be considered by the government and after due diligence a counter-offer would be made.

Qatar has agreed to provide 3.5 million tons of LNG for 15 years. It will also carry out due diligence of private parties interested in importing LNG.

OGDC MD to be appointed in a week

Earlier addressing the parliamentary panel, Hussain said the government would appoint a permanent managing director of the Oil and Gas Development Company (OGDC) within a week.

The committee met under the chairmanship of Sardar Talib Hussain Nakai to look into allegations of corruption and irregularities amounting to Rs202.16 million in OGDC, the country’s largest oil and gas producer.

OGDC Acting Managing Director Bisharat Mirza told the committee that academic degrees of all workers had been sent to the Higher Education Commission (HEC) for verification. “Degrees of 1,000 officials have been verified while documents of four junior officers have been found to be fake,” he said.

The meeting was informed that since February 2010, 63 people had been holding additional charges of key posts in the company.

Hussain said no official would have additional and acting charges by the end of April, adding no official would be promoted without undergoing tests and interview.

The panel discussed OGDC’s inquiry report on purchase of chemical worth Rs55.130 million and loss of Rs5.630 million due to its sale below cost price. However, the MD said the chemical was not sold below market prices instead it was sold at higher prices and the company earned a profit.

The panel constituted two sub-committees to further investigate the irregularities.

Published in The Express Tribune, February 29^th, 2012.