India negotiating with Pakistan over fuel exports

Published: April 29, 2012

Bhatinda oil refinery set up 100km away from Pakistan’s border. ILLUSTRATION: JAMAL KHURSHID

BHATINDA: 

“India has held talks over exporting refined fuels to its neighbour Pakistan,” said the head of Hindustan Mittal Energy at the inauguration of the company’s new refinery at Bhatinda located 100km from Pakistan’s border. The $4 billion project is a joint venture of state owned Hindustan Petroleum Corporation Ltd (HPCL) and Mittal Energy, owned by steel king Lakshmi Mittal.

Moves to stimulate trade flows and liberalise restricted investment rules have emerged as the key driver of peace efforts between the neighbours, whose fragile ties were shattered when Pakistani militants attacked the Indian city of Mumbai in 2008.

“There were government-to-government discussions. A delegation from Pakistan came but nothing has been finalised,” said HPCL and Hindustan Mittal Energy Chairman S Roy Choudhury

“Any decision has to make economic sense,” he added.

Pakistan said last month it was close to removing petrol from a list of banned imports from India. It allowed diesel imports in 2009, but no Indian supplies were sent in the face of preferential prices offered by allies such as Kuwait.

“We have significant refining capacity to enable us to export petroleum products,” Prime Minister Manmohan Singh said at the official opening ceremony of the Bathinda refinery.

On the contrary, industry experts said that fuel exports by India to Pakistan could be difficult as India’s own fuel demand is rising, and Pakistan uses fuel of lower specification than what is being produced at Bathinda and other Indian refineries.

Hindustan Mittal Energy is in talks with Kuwait and Saudi Arabia for long-term crude supplies, Choudhury said. The refinery will help to meet fuel demand in the India’s northern region, which is short of refined products.

India’s current refining capacity is close to 4.3 million barrels per day (bpd), including Bathinda’s 180,000 bpd. The plant may eventually double capacity to 360,000 barrels per day, said Mittal, also chairman of steel giant ArcelorMittal.

India decided to permit foreign direct investment from Pakistan this month, in the latest sign of thawing economic ties between two nuclear-armed foes that have fought three wars since their independence from Britain in 1947. 

Published in The Express Tribune, April 29th, 2012.

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