India, Pakistan kick off oil talks
The talks were held by senior civil servants from both countries' petroleum ministries at a hotel in Islamabad.
India has offered to export petroleum products to Pakistan to help it overcome an energy crisis which cripples the country's industry and leaves millions of people suffering during the hot summers and chilly winters.
"India has surplus petroleum products and wants to export it to Pakistan. If we can save some money by buying it from India, we will buy it from them," a senior official at Pakistan's petroleum and natural resources ministry told AFP.
The official attended the talks but spoke on condition of anonymity because he was not authorised to speak to the media.
"We today discussed how to import products from India. We would like to get diesel in Karachi and furnace oil through the Wagah border. We are very interested in getting furnace oil in Punjab for the power plants," he said.
The official said quantity and price had yet to be discussed and that the cabinet would have to approve any future petroleum trade.
"We will discuss the issues related to quantity and price in a second session of talks scheduled in New Delhi in the first week of July and then cabinet will make a final decision on the proposals," he said.
Pakistan's annual requirement for petroleum products is around 80 million tons. The country imports 85 percent of its needs, the official said.
Last year India exported goods worth $2.33 billion to Pakistan, while its imports from its neighbour were worth $330 million.
Efforts are being made to boost Indian-Pakistan trade since Pakistan decided to grant India "Most Favoured Nation (MFN)" status by the end of the year.
Trade has been hampered by restrictions and tariffs – even now, direct cross-border traffic accounts for less than one percent of their global commerce.
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We just only need to start thinking of making ourselves self sufficient in petroleum products which we can be if government can invest a bit for setting up new projects for research and development of the drilling and refining industry. The investment can be regenerated from these units in just a time span of 1-2 years.
The simple thing is why Pakistan should import??? Pakistan has oil reserves more than many of the Asian countries and yet there is no talk about setting up new refining units because the people who are talking about importing only want to get some part of the money for themselves.. They do not think of the benefits of the nation but only self centered. If new refining units can be installed although capital costs would be high but once the processing is started the capital costs can be regenerated from the refineries in just 1-2 years and other than that lots of people can get jobs or other small businesses which are related to this industry.. So, Pakistan should set up its own plants and drilling units than importing oil from any other country..
@Shah: "If our corrupt politicians choose not to fill up their pockets, I am sure within the next 5 years we can start producing petroleum products. Nuclear bomb was just an example if we want we can do it."
So what prevented your incorruptible army leadership from doing this between 1999 to 2008. As per my maths, that was 9 years (more than the 5 that you mentioned).
Also who started the atom bomb project - PPP under Bhutto. When were the 6 explosions that announced Pakistan's arrival to the nuclear club occur? Under Nawaz Sharif's PML-N.
Don't just blame 'corrupt politicians' for everything.
@Shah: "If our corrupt politicians choose not to fill up their pockets, I am sure within the next 5 years we can start producing petroleum products. Nuclear bomb was just an example if we want we can do it."
@....: "@BlackJack Why on earth would you willingly pay more for oil? So you can buy it from “friends” in the “Ummah”??"
My friend : BlackJack is an Indian. He is being sarcastic. Earlier when trade and MFN were being discussed a lot of Pakistanis implied that becausethe exports from Pakistan were lower tan imports from India, that India was somehow taking undue advantage. The point I guess that is being made is that balance of trade depends on the type of goods that are surplus in each country that are deficit in the other. Unless there are some specific unfair trade terms (which should surely be addressed), a trade deficit is not indicative of exploitation per se.
@khan The PKR 103 cost of petrol - does it have an element of subsidy in it? I do no t know but it is possible. In that case comparing 103 to 95 would not give a true picture of the cost savings. Again this is something I do not know but wanted to point out as a possible factor.
@Shah: "If our corrupt politicians choose not to fill up their pockets, I am sure within the next 5 years we can start producing petroleum products. Nuclear bomb was just an example if we want we can do it." Like any other country, Pakistan can do anything it wants. It cannot do everything it wants. So it has to prioritize. Now that it has the minimum deterrence in terms of nucler capability, - Does it want to spend more on new weapons or on creating petroleum refineries - Does it want to spend more on new missiles or in addressing the circular debt that is leading to load shedding? - Does it want to continue to approve one line budgets to army without scrutiny or upgrade the spending on education?
Yes. Pakistan has some smart and hard working people. But it is not just corruption which is preventing some of the goals from being accomplished (though corruption surely is part of the problem). A big issue is priorities.
Pakistan leaders (politicians and army) will have to decide what is more important - India se dushmani nibhaana ya Pakistani awaam se dosti nibhaana
Really funny how some Pakistani comments question why the need to buy Petro Products from India simple because these Pakistanis have been brainwashed to hate "Hindu" India. Perhaps they are afraid that the Petro Products that India will sell are not Halal-Petrol?
@Shah: Totally agree
@Shah: Can you remember who was ruling 5 years ago?
@ayesha_khan: If our corrupt politicians choose not to fill up their pockets, I am sure within the next 5 years we can start producing petroleum products. Nuclear bomb was just an example if we want we can do it.
@Zeeshan Sheikh: Iran is also importing refined diesel and petrol as it does not have enough refining capacity for its needs .
@TT: You summed it up very clearly and simply . To my Pakistani friends buy petrol from the pump where you get it cheapest , just because you buy petrol from a pump does not mean you have to get married to the owners daughter.
@Shah: "So your telling the country which developed its nuclear bomb and is one of the eight countries around the globe to have it can’t afford to drill out oil. Only if our corrupt leaders give up on filling up there own pockets we will have all the resources we need my dear"
I don't think I said that. This article does not refer to crude oil - which can be drilled. This article refers to refined oil products. What I stated is that Pakistan's current refining capacity s less than its demand. India on the other hand has surplus refining capacity. So the issue is not even a lack of refining technology in Pakistan just lack of adequate refining capacity.
In any event, nuclear bomb has nothing to do with refining petroleum products. Unclear why you brought that into this discussion.
Price of Crude Oil - $105/barrel Price of transport - $4/barrel Refining Cost - $12 /barrel 1 Barrel of Crude Oil = 42 US Gallons (or 158.987 Litres)
105+4+12/158 = 0.765 /l x 92 = PKR 70.5 (without any taxes)
1 barrel of crude oil gives
7.27 gallons (27.5 liters): Other products (asphalt, bitumen, tar, etc.) 1.72 gallons (6.5 liters): Liquefied Petroleum Gases (LPG) 3.82 gallons (14.5 liters): Jet Fuel (kerosene) 1.76 gallons (6.6 liters): Heavy Fuel Oil (Residual) 1.75 gallons (6.6 liters): Other Distillates (Heating Oil) 9.21 gallons (35 liters): Diesel 19.15 gallons (72.5 liters): Petrol
http://www.iocl.com/Products/PriceBuildup/Price_buildup_of_MS.pdf
@Shah: Have you heard of Reliance and ONGC ??? They are on eof the few companies in world which has Oil drilling capability even form ocean bed. The challenge for oil drilling is not the capability for drilling but availability of unclaimed drilling sites. Most of these big nations including China have already made territorial claims on most of the drilling sites, leaving rest of the world with no option but to import from the major exporters. I think it is high time people start investing in alternate fuel. USA has waken up and is already doing it, so is China......India and Pakistan can do it too.......if they learn to "WORK WITH EACH OTHER".
@Khan: 1 GALLON IS NOT 4.5 LT IN usa . It is only 3.5 lt./gal.
@ayesha_khan: So your telling the country which developed its nuclear bomb and is one of the eight countries around the globe to have it can't afford to drill out oil. Only if our corrupt leaders give up on filling up there own pockets we will have all the resources we need my dear
@BlackJack
Why on earth would you willingly pay more for oil? So you can buy it from "friends" in the "Ummah"??
Is the idea of consorting with those of other religions so repulsive that you would willingly pay more for an essential resource just so you can buy it from a Muslim country?
I, for one, thank god that the general hatred of India has not reached such ridiculous heights in the government yet
Why not importing from Iran ? oh forgot for a minute that we are slave of USA
@shah: "v"
Regardless of whether Balochistan has crude oil or not. Pakistan has shortage of refining capacity compared to its demand. So it HAS to import refined products - whether India or elsewhere until such time as incremental refining capacity goes onstream in Pakistan
@Max-lol: "What i don’t understand is that why are all these ‘normalization talks’ are originating from India only, even though Pakistan has not responded positively firmly to any of the proposals."
Pakistan has NOT responded positively? Where in this article does it say that? Here is what I read: "We today discussed how to import products from India. We would like to get diesel in Karachi and furnace oil through the Wagah border. We are very interested in getting furnace oil in Punjab for the power plants,” he said."
@Patriot Khan: "How can a country suffering from severe oil crises export oil to Pakistan?"
India imports crude oil. This discussion relates to refined petroleum products. India has surplus capacity in that area.
It is upto Pakistan to take that decision based on logistics and price. Likewise for India the credit terms would be relevant given Pakistan's weak record in terms of contract enforcement.
But it looks like your hatred for India overrides the fact that Pakistan faces a forex crunch and these costs savings might help Pakistan's overall balance of payments.
Why do I get the impression that Pakistan and India like to talk to each other ( a lot!)? Nothing constructive have happened in recent times. MFN status, liberalization of visa, re-establishment of cricket ties - all talk and no action. Add oil imports to the list?
@TT Very good clarification. What this effectively mean for India is that it only provides refining service to Pakistan at a price almost = Indian diesel price in USD- Intl crude price.in USD The net gain for India is only the extra capacity utilization the Pakistani demand provides.. Pakistan can make best use of JIT delivery, less storage problem and better cash management. Besides the large investment in refinery, the major cost of refining is the electrical energy itself, which Pakistan is in short off, and this arrangement is a as good as its own in house refining without headache, for a small fee.
@Khan: The US gallon is a approximately 3.79 liters and not 4.5 liters. It is different from UK gallon.
@shah: We would have only if we had any.
@TT: In another story on the same topic they said we will get 30% cheaper oil .. going by your calculations if I may quote you,
Today's oil/petrol rate in Pakistan is 103 Rs per litre if we convert that to Indian Rupee it comes down to 61 INR. If we are getting it at INR 50 (84 PKR) and then add transportation costs and all this and that taxes we might just get it slightly cheaper but not but a huge margin. If petroleum ministry is saying 30% cheaper I would call it a bluff IMO it will be somewhere around Pkr 95. I'm not saying we shouldn't do it as anything cheaper is better no matter where you get it from although govt should establish refinery plant in Pakistan for future needs.
For Gods sake just drill out oil from Balochistan! why import from India out of everyone.
@Menon:
Can you please give an example of your statement? Diesel is sold at $4 per gallon (4.5 liters) in the United States its about $0.88 cent per liter. I live in UK so If I convert that to British pounds it comes down to .55 pence per liter whereas here in the UK its been sold at £1.44 per liter. Petrol prices in the US are the cheapest in the world .. lets not forget United States is third largest oil producer in the world after KSA & Russia.
For those that will say there will be a trade imbalance, oil does not grow in Pakistan. It still has to import whether its from North Korea or Somalia
@Patriot Khan: ery Petrol prices are determined by world oil prices, central and local taxes. Go find out how much taxes you per litre. Every country on the planet taxes petroleum and derivative products high except oil producing countries in the middle east.
Take look at the Diesel prices in the US, higher than anyehre else in the world, highger than Regular Gasoline closer to Premium Gasoline all because of tax on deisel. Don't really know why.
Besides diesel and kerosine is refines from lower qulaity crude.
One more cost: Oil maketing companies margin and transportation
Oil product prices carry these parts: crude prices(which remains almost same for all countries depending on the type of cruse(Brent crude and NY lite)) Refining margin and cost(depends on the efficiency of companies,Large comapanies like Reliance make a variety of oil products which causes average lowering of different oil products costs) Central custom duty and taxes( this is applies by central gov) State excise duty and services Tax( State govt applies it for state's coffer)
Now try to understand simple point. In India actual cost of petrol is not more than rs 45 and the rest goes as state and central taxes as they are easy way of getting indirect taxes.Now if India exports the refined oil products to other countries central govt charges less tax on it and state govt doesn't charges any tax.So the exported oil products will cost about rs 50 (say) for Pakistan. Now on this PAK govt itself will apply their taxes.
So, thre is no oil crisis in India since if PAK demands extra oil products then India can simply import more crude and export the refined oil to PAK. It only depends on how much refining capacity is existent in India which is in Surplus. So stop posting on these business post without any knowledge. Thnx
Actually India and Pakistan are natural allies but politically we have been denying it and hurting ourselves. With close ties and increased trade can immensely benefit both countries but then military function will be reduced that they won't like to see and mullah and ram ram cards will be played as front men.
How can a country suffering from severe oil crises export oil to Pakistan? I live among Indians, and they are suffering from the worst hike in oil prices. There must be a motive behind this trade. Someone will again make lot of money from this trade.