Improving relations: Govt considering buying cheaper Indian oil products

Published: May 26, 2012

Besides oil, gas and power import will also be discussed in talks next week. DESIGN: SAMRA AMIR

ISLAMABAD: 

Pakistan is considering meeting its needs for diesel and furnace oil from India, which will cost 30% less than imports from Gulf countries, sources say. The government is also discussing import of 200 million cubic feet of liquefied natural gas (LNG) per day and 500 megawatts of electricity from Delhi.

An import plan for oil, LNG and electricity is being discussed after the federal cabinet granted most-favoured nation (MFN) status to India late last year.

“We are in deficit and will take up the issue of diesel and furnace oil import with an Indian team scheduled to meet with us in Islamabad on Monday,” Petroleum Minister Dr Asim Hussain told The Express Tribune.

Total diesel consumption of Pakistan is 6.9 million tons per year and domestic oil refineries produce 3.2 to 3.4 million tons. The remaining quantity is imported.

Furnace oil demand stands at about nine million tons, of which refineries produce about 2.5 million tons and the rest is imported. Consumption of furnace oil is expected to surge to 16 million tons by 2015-16 because of upcoming new power projects.

Hussain said Pakistan was a major importer of diesel and furnace oil and the two products could be purchased from India at cheaper rates. “We are interested in fulfilling our total requirements of diesel and furnace oil through imports from India,” he declared.

He said Pakistan was also discussing the option of gas import from India. According to sources, Pakistan will prefer Indian LNG compared to imports from Qatar and other countries because Delhi will ensure swift supply due to the two countries being in close proximity to each other.

“Indian oil products will be 30% cheaper than those from Gulf countries,” said an official of the Ministry of Petroleum and Natural Resources.

The official dispelled the perception that the government would import only 5 to 10% of its oil needs from India. “If we get 30% cheaper petroleum products, why shouldn’t we meet total import needs of diesel and furnace oil from India,” he asked.

The official said the government, encouraged by the prospect of a quick start to the project, was mulling over import of 200 million cubic feet of LNG per day from India. “If we import LNG from Qatar, it will take three years to make first purchases while import from India can be possible within a short span of six to eight months.”

In bilateral negotiations, to be held next week, gas import from India will come up for discussion.

According to the official, a plan was under study to ship imported Indian LNG through bowsers and tankers via land route to the consumers of Punjab, which has been hit the hardest by gas shortage.

A plan for import of 500 megawatts of electricity from India will also be discussed in the talks. Power crisis has badly shaken the country and the ruling Pakistan Peoples Party (PPP) is desperately pursuing different plans to tackle the problem in an attempt to avoid the wrath of people before general elections.

Published in The Express Tribune, May 26th, 2012.

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Reader Comments (13)

  • Zalim singh
    May 26, 2012 - 8:30AM

    Cheaper??? any idea how costly petrol is in India?

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  • Saqib
    May 26, 2012 - 9:16AM

    India is a net importer of LNG and other gas condesates, how will it fulfil Pakistan’s needs? Would it just pass on its imported LNG to Pakistan? Also, imported Diesel/FO may be cheaper from India but Gulf countries provide bulk crude to Pakistan at consessional rates with easy financing facility. It will be better if Pakistan completes its refinery at Khalifa point and Indus refinery at port Qasim which (along with Bycos upcoming refinery would) meet Pakistan’s entire POL needs.

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  • John B
    May 26, 2012 - 10:18AM

    “According to sources, Pakistan will prefer Indian LNG compared to imports from Qatar and other countries because Delhi will ensure swift supply due to the two countries being in close proximity to each other.”

    It took this long for the geniuses in PAK to figure out that shipping from India will be quicker and cheaper.

    The world is encouraged with such news.

    Rising global oil prices and demand can no longer afford the luxury of subsidy, politics and ego.

    PAK should move away from subsidizing energy. Energy is the basis of modern economy and subsidizing energy creates a subsidized Economy.

    Indian refineries have excess capacity and PAK can use it productively.

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  • unbeliever
    May 26, 2012 - 10:35AM

    what pakistanis are upto. a litre petrol now costs a whooping $1.35.
    and it would be cheaper to pakistanis.
    recently indian companies raised petrol price by more than 10 %… it’s time to buy a cycle, or go for public transport.

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  • JSM
    May 26, 2012 - 11:15AM

    I request for a clarification- Has India been granted MFN by Pakstan? Or is it an intention?

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  • mudassar
    May 26, 2012 - 11:30AM

    i am working in the energy sector of country and i know the problem right now is not the capacity lacking but it is will that is short at this moment we are willing to buy energy from neighbours that is good but if something we can produce by our self.
    why not ask india to settle mutual trading in Paksitani & Indian currency?

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  • Shyam
    May 26, 2012 - 2:30PM

    If petrol price goes any higher in India we will have to buy petrol on EMIs

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  • Farhan
    May 26, 2012 - 4:37PM

    Good decision. Purchase anything that can come in cheap price. Pakistani should also divert more funds to small and big dams to produce cheap electricity because we cannot afford the most expensive energy coming through furnace oil.

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  • Ashvinn
    May 26, 2012 - 4:38PM

    @Shyam:
    Haha good one dude wonder if it would zero percent interest rate

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  • Asif
    May 26, 2012 - 4:40PM

    So India imports very cheap oil from Iran, refines it and sells it to Pakistan. Why on earth can;t we do the same!!!
    When India can resist U.S pressure against imports from Iran than why can;t we do the same!!

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  • Ali Tanoli
    May 26, 2012 - 5:47PM

    Mr Jinnah why you wasted your energys to seprate us.Recommend

  • basil
    May 26, 2012 - 8:54PM

    30% cheaper ! how ? I think the official from the petroleum ministry got his maths wrong. its probably 3%.

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  • Ahsan J
    May 26, 2012 - 10:36PM

    What on earth are they talking about? India does not have that much export capacity in either LNG or diesel. Like most of the comments above me. India is a net Importer of Petroleum products… Makes no sense

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