Foreign firms compete for Pak’s oil market

KARACHI: Pakistan’s oil market has become a battleground for two Gulf oil giants, Kuwait Petroleum Corporation (KPC) and Saudi Aramco’s trading arm, Aramco Trading, as they vie for dominance in the domestic market.

In recent months, competition has intensified between the two companies, industry sources told The News. The rivalry began when Aramco entered Pakistan’s market by acquiring a 40 per cent stake in Gas & Oil Pakistan Limited (GO), a local oil marketing company (OMC), in mid-2024. This move allowed Aramco to directly compete in diesel imports, a segment historically dominated by state-owned Pakistan State Oil (PSO).

The latest development came as KPC reduced its premium on the import of high-speed diesel (HSD) for PSO. According to the Oil and Gas Regulatory Authority (Ogra), the premium was slashed from $5 per barrel to $3.25 per barrel earlier this month. PSO has a long-term agreement with KPC to import HSD to meet the country’s domestic needs.

Sources revealed that KPC’s decision to lower its premium was not made in isolation. GO had secured regulatory approval to import HSD from Aramco Trading and managed to procure it at discounted rates compared to PSO’s imports from KPC. Despite initial resistance from local refiners, GO imported approximately five cargos at these competitive rates, further intensifying the rivalry.

KPC’s reduced premiums on HSD for PSO have now been extended for six months, indicating the pressure from Aramco’s competitive pricing. GO has been supplying HSD to other OMCs at lower rates, putting additional strain on KPC’s market share.

Pakistan remains a significant market for HSD. During the first five months of the current fiscal year, local refineries produced 1.8 million tonnes of HSD, which fell short of domestic demand. The country imported 0.8 million tonnes of HSD during this period, with total petroleum product imports amounting to $2.3 billion. HSD accounted for over half of these imports, underscoring its critical role in the energy mix.Despite the formal imports, the market also absorbed significant quantities of smuggled diesel from Iran.