Saturday April 01, 2023

Pakistan seeks UAE deal to import 1.5m tonnes of petrol annually

November 15, 2022
A fuel station worker refills a cars petrol tank. — AFP/File
A fuel station worker refills a car's petrol tank. — AFP/File

ISLAMABAD: The government has decided to write a letter to the UAE government in the current week for the initiation of a process to sign an inter-governmental agreement (IGA) paving way for a government-to-government deal for the import of 1.5 million-ton petrol per annum.

Pakistan intends to import 1.5 million-ton Motor Spirit (Mogas) i.e. 30 cargoes in one year under a 5-8 year deal, which means the country would import two and a half to three cargoes a month from the UAE. “We have already signed the IGA template with Oman, Qatar, the Kingdom of Saudi Arabia and some other countries and the same will be sent to the UAE for authorities to examine it and sign it. Once the IGA is signed, both countries would start negotiating the GtG deal for the import of Mogas (petrol), crude oil and Jet fuel,” a senior official of the Energy Ministry told The News.

During the Abdu Dhabi talks held in the first week of the current month, top officials s from both sides had agreed to enter a GtG deal for the import of petrol, crude oil and Jet fuel. “This would help Pakistan have sustainable availability of petroleum products in the country. More importantly, the GtG deal would also provide a monetary solace in terms of premiums in importing petrol and other products.”

Once the IGA is finalized and inked, on behalf of Pakistan, the public state-owned company, Pakistan State Oil (PSO) and on behalf of the UAE, ADNOC (Abu Dhabi National Oil Company) will initiate talks for a commercial agreement on a GtG basis. Pakistan wants both IGA and business deals to be inked before December 31, 2022, so that from January 2023, the import of petroleum on a GtG basis could start from the UAE. The official explained that after the IGA was inked, both sides would initiate talks on the structure of the commercial agreement and finalise the specifications of petrol, jet fuel and crude oil for the country’s existing refineries.”

PSO gets diesel from KPC (Kuwait Petroleum Company) under the GtG deal and purchases petrol from the open market with high premiums depending upon the prices of products in the international market.

Now under the GtG deal, PSO would get petrol from ADNOC at a negotiated price. In addition, PSO would also import jet fuel on a need basis as the country’s refineries cater for jet fuel needs most of the time.