Iran has given Pakistan an offer that looks like it is too good to refuse. Tehran offered 100,000 barrels per day of crude supply to fuel-starved Pakistan on a long term deferred payment. This offer comes amid US efforts to block Iran’s oil exports to the world to build up economic pressure in an attempt to curb Tehran’s ‘going nuclear’ ambitions.
Sources told The Express Tribune that the Iranian government made the offer during the visit of the petroleum adviser Dr Asim Hussain to Tehran earlier this month.
According to sources, Iran had also offered to enhance supply if the two sides moved ahead on the proposed oil exports plan. The crude oil imported will be processed by Pakistani refineries.
“Iran is losing half of its oil revenues because of international sanctions imposed over its disputed nuclear programme,” AFP quoted Iran Economy Minister Shamseddin Hosseini as saying on Monday. Hosseini put down the loss to difficulties in repatriating oil money.
According to the International Energy Agency, Iranian exports in November were estimated at 1.3 million barrels per day, down from nearly 2.3 million last year.
The US is making efforts to block Iran’s oil exports as it estimates that crude sales provide about half of Iranian government revenues and that oil products make up nearly 80% of the country’s total exports.
US is already working to convince the Government of Pakistan to shelve the Iran-Pakistan (IP) gas pipeline project, designed to import 750 million cubic feet per day (mmcfd) of gas from Iran to meet its domestic requirements. The recent Iranian offer may further anger the US and pressure may build upon Pakistan to refuse.
“At present, Pakistan is facing problems in repayment of the International Monetary Fund (IMF) Stand-By Arrangement $7 billion loan and long term oil credit facility may ease pressure on foreign exchange reserves,” a senior government official said, adding that however, Pakistan many not be able to materialise the offer due to payments issues.
Pakistan was importing 73 megawatts (MW) to meet the requirements of Gwadar in Balochistan but payment issues were hampering these imports.
Previously, Tehran supplied 45,000 barrels of crude oil to Pakistan on a three-month deferred payment plan until January 2011. However, the United Nations imposed sanctions halted imports due to difficulties in opening letters of credit from global banks. Since then, Iranian oil is largely smuggled into Pakistan. “So, the payment issue may again halt the oil supplies if offer materialises,” official said.
An official said that Pakistan Refinery Limited (PRL) was designed in 1962 to process Iranian oil. “But consumption of Iranian oil in Pakistan is very low and therefore PRL has made modifications,” he said, adding that no refinery in Pakistan can process 100% Iranian crude oil. “The oil pipeline between two countries may be feasible If Iran sets up a refinery in Pakistan,” he added.
Sources said that petroleum adviser Hussain had also discussed a plan of establishing a Iran-sponsored refinery in Gwadar and laying an oil pipeline between two countries. “Under the plan, an oil pipeline is to be laid right up to the Gwadar Port, where a crude oil refinery will be set up. Pakistan and Iran may enter into a joint venture partnership to set up the refinery,” sources said.
Iranian oil had more component of furnace oil and Pakistan furnace oil requirement had increased from three to four million tons in 2004-05 to nine million tons in the ongoing financial year. The production of furnace oil capacity of local refinery is up to 3.5 million tons annually.
At present, the Pakistan State Oil (PSO) is a major importer of furnace oil to meet requirements of the power sector. “Pakistan may also meet furnace requirements by importing crude oil from Iran,” an industry source said, adding that Pakistan may save 20 cents per barrel as it will no longer have to bear the costs of transporting Iranian oil.
Published in The Express Tribune, December 18th, 2012.
COMMENTS (34)
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The posts that @Liberal and @Babablacksheep made have surpassed the point where their assertions are so utterly stupid they are not even worthy of a rebuttal. These two people are just here to spam instead of contribute meaningfully to this discussion.
Iran is no friend. It is claiming a very high price which is 80% of the japan import price. This price was fixed when India was a part of it. Now since pakistan will not get the transit fee after India ran away, we will have to raise gas prices for household and cng by 4 times and fertilizer by 2000 times to meet the import rate from Iran. And if Zardari govt goes ahead with the same price then this will be another of many crimes to this nation and our generations to come will pay with their blood. Refer to the link below: http://www.dadapota.pk/column/urdu-columns/nijat-humain-hamare-doston-se-bachao.html
Pakistan shall be free to do so when US' pressure and threats in any means and manifestations on Pakistan shall be released.....
@S T Ali: Yes, they promised to donate $100M. Did they pay even a single cent of the promise? A lot of nations make pledges during disasters but rarely follow through.
Two of the three countries that let down Pakistan on the nuclear proliferation issue and submitted proofs to UN were Libya and Iran. However, N. Korea did not let Pakistan down on this issue. Had it not been for Iran and Libya, it would have been impossible or at least very difficult to pin Pakistan down. The result was that Pakistan is still facing nuclear sanctions.
@Raj-USA @poleturtle
That strategy of Indians doesn't work with Russia. Remember Vikrant class aircraft carrier???
the news is about pak and iran , but you have one indian bhai sahib talking about getting coconuts on the cheap... another indian (caution) giving unsolicited advice and a few dozen others 'liking' their comments.
what illness ails these people?
@G. Din: well..... do you want to know why they dont attack iran and syria.....? because russia and china are itching to change the u.s. power and evrything else.......!!!!!!!! ther is many ways to finnish u.s. then war.....for exsampel change the petro dollar and many more things like that
well guess what , you are not getting this offer because iran follows the love thy neighbour policies , you are getting this because iran is simply not allowed to do business with anyone and its not just the usa , these sanctions have been applied by the whole world, and doing this would mean u go against all of them . and iran has never helped out pakistan in need and they wont even take in our exports so why should we buy this fuel which comes with a free ticket to further mess up things with rest of the world. And for those who think that this is a decision Pak has to make between iran and usa,our biggest export market is usa , if we get the needed fuel and usa closes its doors where would export the goods made out of that fuel ???? Best would be to get US on board and get the oil too. But if theres a choice of either or or , then u better take sides with USA
This just shows how hard Iran is getting hurt due to the UN sanctions imposed on it but it still wants to continue to proceed its rogue agenda.
I have a better deal in mind. Give Iran a promise of a couple of Intercontinental Missiles loaded with Nukes and get all the energy free for the next 25 years.
Maybe Pakistan should consider the pro's and con's on the deal. Deferred payment is great but there is usually a cost -- interest being one and in this case the potential loss of access to international loans/aids. Chest thumping anti American comments maybe great for the ego but don't diminish the real risk associated with siding with Iran -- if China is afraid of the consequences of upsetting America one would think Pakistan should be terrified.
@John: "Every country is autonomous. Every country has right to nuclear build weapons just like US Israel, India, Pakistan and other nations have built one." Every country is autonomous. And, that is why Israel or US will exercise their autonomy by wiping Iran off the map of the world and no one dare stop them. There, you have it. Everyone has the birthright to his autonomy and freedom to exercise it also. Can there be a better lofty principle? "Maybe we are putting sanctions on wrong country here." You are putting no sanctions on anyone. Just because you call yourself John does not mean you will be accepted as one, too. That is another autonomy everyone enjoys!
Pakistan can afford to say NO to Iran but can`t afford to say NO to USA. This is the whole naked truth
@Lala gee to @Raj - usa different contexts, different meaning. anyway, he wasted his 5 mins and this space, thought you have some GSOH.
What a pitty!!! and we still celebrate independence celebrations every 14 Aug. Goraas physically ruled this land for over 100 years being, which I believe was far better than the recent mess of remote rule by US establishment.
@Observer: How do you know and how can you substantiate your claim? They promised the money to the government and am just wondering if you are the proverbial fly on the wall hearing the wrong infromation
@SK5: Dear SK5, Iran may be going through a tough time due to illegal activities by US/NATO criminals, but at the end of the day, oil in the ground is money in the bank. If only my long term financial position could be as good as that of Iran! One wonders how long we will have to put up with US/NATO idiocy? The US/NATO group constantly work on the supposition that might is right. When will they introduce morality and fairness into their dealing with the non-western world? I would think never. They have taken advantage of non-western countries for several hundred years now and have financially benefited. Why would they change?
As far as I am concerned, I think Pakistan should have to go for the deal, and US should stay out of it, as Pakistan is an independent country. If US is supporting Pakistan in some cases and providing some assistance it doesn’t mean that it all the time imposes its order on Islamabad. It’s all about Pakistan’s foreign relations, Pakistan should be aware of US policies up till now, and don’t repeat the mistakes.
Idea is not bad BUT deal based on Pak Rupees n defer payment also to be based upon Pak Rupees NOT on USDollar.
@Raj - USA: The South Indians can't think of anything other than Coconut, no matter even they live in US or moon. The eat coconut, sleep coconut, speak coconut, and so on.................
Every country is autonomous. Every country has right to nuclear build weapons just like US Israel, India, Pakistan and other nations have built one.
US is the only country to use a nuclear weapon on civilian population. Maybe we are putting sanctions on wrong country here.
For God's good sake, leave this US for good, for once and for all.
Pakistan has no ways out either to complete the IP project or to find some other urgent alternatives. So why not availing the offer which is in-front of our door rather than begging american for more uncertain aids.I think the IP project is a durable solution for energy crises.
No commission, No Deal
The US has no right to interfering with our deals with Iran. Both Pakistan and Iran will proceed if the deal benefits both.
This is the same Iran that promised $100M as donation for flood devastation. Not one penny of that promised money actually materialized.
@Nadir If my memory serves me correctly then I think the Attock Refinary can be used to process crude oil. If not then I guess your right but it might pay for offcials to look into this deal after all Iran dosen't have much customers(unfortunately).
A story I heard during my school days:
Someone sent his servant to buy a coconut from the market. He tells the servant "Always bargain. Ask him if he can give it for half of whatever price he quotes. He will agree." The servant goes to the coconut vendor and asks the price. The vendor says it is Rs. 200. Servant asks the vendor if he can give it for Rs. 100. Vendor says, since he is the first customer and does not want to turn him away he would give it for Rs. 100. Servant asks the vendor if he can give it for Rs. 50. Vendor thinks for a while then says that he really need Rs. 50 to buy some medicine immediately. So he would give it for Rs. 50. Servant asks the vendor again if he can give it for Rs. 25. The vendor gets annoyed and tells the servant mockingly, he can even have the coconut for free. Servant asks the vendor if he can give two coconuts for free ................
As long as Pakistan holds back, Iran will better the offer.
LOL no money to lay the pipeline or build refineries and no way to pay Iran for the oil.
We want this deal to go through...the US is offering us nothing but partial funding on unrelated projects and a lot of "pressure"...
Iranian crud cant be refined, the oil on deferred payment eventually will have to compensated. Its too good to be true.