Islamabad-Riyadh parleys: Long-term oil credit facility high on Saudi talks agenda

Joint ventures for oil, gas exploration will also come up for discussion.

ISLAMABAD:

Pakistan is going to seek a long-term credit facility for oil purchase from Saudi Arabia during two-day talks in Riyadh starting on Tuesday, a move that will help save and ease pressure on the country’s foreign currency reserves.

A 20-member strong Pakistani delegation including officials from different ministries and businessmen has left for Saudi Arabia to take part in the parleys, sources say. Minister of Commerce Khurram Dastgir and his Saudi counterpart will be present during the deliberations.

A two-day Joint Ministerial Commission meeting will also discuss the possibility of forming joint ventures between Pakistan and Saudi Arabia for oil and gas exploration in an effort to boost energy production in Pakistan.



The two sides will come up with suggestions to address the issues being faced by Pakistani manpower in Saudi Arabia.

Pakistan has already approached Saudi Arabia through diplomatic channels, asking it to enhance the credit facility for oil supply from the existing 30 days to one year valuing $10 billion. The matter was taken up during the visit of Saudi Foreign Minister Saud Al-Faisal to Pakistan in the first week of January.

At present, Saudi Arabia provides over 10,000 barrels of crude oil per day to Pakistan’s refineries. Annual crude import bill stands at around $7.5 billion.

Islamabad is pressing for expansion of the credit facility by other countries as well. The previous Pakistan Peoples Party-led coalition government had also tried to persuade Riyadh to increase the credit ceiling for oil purchases to one year, but the Gulf monarchy gave Islamabad the cold shoulder.

However, as the PML-N government has got a gift of $1.5 billion from Saudi Arabia, hopes arise that Pakistan will be able to get an extension in the credit period, officials say.

In addition to the higher credit facility, the government is also planning to strike a state-to-state deal with the Gulf countries to reduce the cost of crude oil imports. The import of oil and its products eats up roughly $15 billion a year.

In this connection, the Ministry of Finance is discussing the modalities of enhancing the oil credit facility with the representatives of oil marketing
companies and refineries.

The country’s consumption of petroleum products stands at 22 million tons, of which about 13 million tons are imported. Apart from this, oil refineries import nine million tons of crude oil per annum to meet their processing needs.

Industry players say private companies in the petroleum sector have already made commercial arrangements with different oil suppliers. “And now, the government is planning to enter into relatively long-term oil import contracts with friendly Muslim countries,” an official said.

Published in The Express Tribune, April 15^th, 2014.

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