Ogra orders OMC to clear HSD stock by Oct 1

KARACHI: The Oil & Gas Regulatory Authority (Ogra) assured local refineries on Wednesday that it will allow a private oil marketing company (OMC) to discharge imported high-speed diesel (HSD) from bonded storage by October 1, 2024.

“The cargo that has already arrived will be placed into bonded storage so that it is not available for sale until the end of September,” the oil body said in a press release following a meeting with representatives from refineries and leading OMCs to discuss and adopt a strategy to address issues related to high levels of HSD stocks in the country.

Ogra announced that September cargoes for leading importing OMCs have been deferred, and three cargoes scheduled for October will be either rationalized or cancelled. December cargoes may also be cancelled if necessary, it noted.

Sources familiar with the meeting between refineries and OGRA informed The News that the regulator assured the refining sector that it would cancel the company’s October import cargo. The decision came after the protest by representatives from the five local refineries protested, who demanded that the OMC concerned be allowed to keep the imported stock in bonded storage until the third week of September.

The import of HSD by the OMC faced significant criticism from refineries following Ogra’s approval. Industry insiders questioned why the oil body allowed the import when there is already a substantial stock of HSD in the country. Initially, Ogra permitted the company to import the cargo but later directed it to halt the imported HSD after refineries raised concerns.

Subsequently, Ogra allowed the stock to remain in bonded storage until the third week of September, and now has instructed the OMC to discharge it by October 1, 2024.Ogra’s initial approval for HSD imports for October, despite the country’s large existing stock, and the subsequent cancellation of its orders raised concerns among i ndustry representatives who expressed confusion over the regulator’s incoherent policies and questioned the rationale behind these decisions.

They also pointed out that Pakistan State Oil (PSO), the state-owned OMC, even deferred the import of 55,000MT of HSD under a long-term contract with Kuwait Petroleum Corporation (KPC), yet Ogra’s approach appears inconsistent.

In a letter to the Petroleum Division on Tuesday, Ogra clarified that sales, imports, and production estimates and plans are finalized during the Product Review Meeting (PRM), with careful consideration of various factors. These measures are designed to strengthen the National Oil Supply Chain.

In a separate letter to the Petroleum Division on Tuesday, the refining sector highlighted that the country is experiencing critically high HSD stocks, sufficient for over 50 days of consumption at current demand levels. Any additional imports could jeopardize the stability of the country’s oil supply chain.