Building oil pipeline: Ministry considering floating tenders

After PARCO’s refusal, government is considering options of transporting oil within country


Zafar Bhutta July 15, 2017
At present, oil tankers are used to transport petroleum products and different incidents have forced authorities to re-think the model. PHOTO: APP

ISLAMABAD: As Pak-Arab Refinery (Parco), the joint venture between Islamabad and Abu Dhabi, stays away from laying oil pipelines, the Ministry of Petroleum and Natural Resources is looking at the option of floating tenders inviting companies to transport fuel inside the country.

At present, oil tankers are used to transport petroleum products and different incidents have forced authorities to re-think the model.

According to global estimates, furnace oil worth $200 million is stolen every year during transportation. Given the situation, oil pipelines become a safer mode of transportation, say experts.

Parco was offered to lay a pipeline from Machike to Taru Jabba to transport oil but the company refused, citing it as financially unviable due to the low amount of volume.

Management at Parco had also quoted a reference of an earlier exercise carried out by Pakistan State Oil (PSO) and Attock Refinery Limited (ARL) for this pipeline which was abandoned due to lack of requisite volume.

Ministry of Petroleum and Natural Resources had been informed that Parco was considering constructing a pipeline from Machike to Kharian segment only as and when volume is available for this section.

It was then that Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi asked officials if a tendering process to construct the pipeline could be undertaken.

In case the ministry can pursue the case, three separate tenders would have to be considered for three segments of the pipeline; from Machike to Chak Pirana, Chak-Pirana to Sihala and Sihala to Taru Jabba.

At present, local refineries produce 13 million tons per annum of petroleum products against the current demand of over 24 million tons.

The balance is imported through tenders by Pakistan State Oil (PSO) and private sector Oil and Marketing Companies (OMCs). Demand for petrol is growing at 20% per annum and of diesel at 10% per annum.

Published in The Express Tribune, July 15th, 2017.

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