Improving relations: Govt considering buying cheaper Indian oil products

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

Zafar Bhutta May 26, 2012


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.


Ahsan J | 9 years ago | Reply

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

basil | 9 years ago | Reply

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

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