Petrol bomb dropped

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Petrol bomb dropped

Ismat Sabir

Recently the government has increased POL prices, commenting on it the Karachi-based Traders’ Alliance demanded reversal of POL prices hike. The traders’ alliance totally rejected petroleum price hike, said that the exorbitant raise would bring the storm of inflation in the country. Actually it is like dropping a bomb on poor and middle class people who will be affected badly under the inflation by high fuel oil price and dollar rate increase against the rupee. Association of Korangi Trade and Industry chief also critics the undemocratic practices of the public and traders never reap any fruit of the so-called politically elected governments as no facilities was available to the nation in the 10 years. He said neither the public nor the traders have any sort of easy or low cost energy.
The second increase in fuel oil prices within a month shows the interim rule is in a complete grip of world institutions. He asked the government to take immediate steps to arrest the rising rupee devaluation against the dollar. Caretaker government has increased the prices of petrol by Rs7.52 to Rs99. Rs5 a liter, diesel Rs14 to Rs119.31, kerosene Rs3.36 to Rs87.7 and light diesel Rs5.92 to Rs80.9 per liter. Due to every now and than price increase the country`s total oil sales dropped by five percent to 24.593 million ton in 2017-18 from 25.948m ton in 2016-17 due to 27 percent fall in furnace oil sales. This 5pc decline in sales growth is after a lag of five years when the industry posted a fall of four percent in FY12. Furnace oil (FO) sales dropped to 7m ton in 2017-18 from 9.614m ton owing to reduced demand from power sector during the year, the Oil Companies Advisory Council said.
The government had imposed a ban on usage of expensive furnace oil for power generation during winters FO demand generally picks up. The Lahore Chamber president said that increase in petroleum prices directly affect to the trade, industry and ultimately to the economy. Rice Exporters Association of Pakistan chairman Samee Ullah said this move will reduce the competitiveness of Pakistani goods in the international market and put the government’s initiatives in reverse for boosting exports. He said that the increase in petroleum prices would increase the input cost of agriculture production as high speed diesel is being used in tractors, tube wells, harvesters, thrashers and other agriculture machinery. He said that the cost of thermal generation by private sector will also go up. The REAP chairman said that government is producing huge amount of electricity through thermal means and after increase in petroleum prices the rates of electricity would touch new highs. He urged the government to withdraw hike in POL prices to avert huge economic losses and to win the trust of trade, industry and masses otherwise anti- PIAF chairman Irfan Iqbal Sheikh also rejected POL price hike and the logic for this initiative given by the Ministry of Finance.
On the one hand oil import bill is increasing day by day and on the other about 30 to 40 oil blocks lying idle for non-issuance of NOCs. The Petroleum Division sought parliament`s assistance for early disposal of more than three dozen requests are pending for years with the defense authorities for security clearance. The petroleum secretary also said that billions of rupees worth of funds collected from oil and gas firms under corporate social responsibility stood transferred to the provincial and district administrations for development works like school, health and water supply schemes.
PSO Managing Director Sheikh Imran-ul-Haq said price with Qatar Gas for a 15 year LNG supply contract was finalized by a price negotiation committee (PNC) comprising a number of federal secretaries at 13.37 per cent of Brent on a governmentto-government basis without bidding. He said the price with Qatar was earlier finalised at 13.7pc of Brent but later brought down when it agreed to match price quoted for a similar supply contract with Gunvor through tender. The ISGC Managing Director said his company was ordered by the government to process international bidding for LNG terminal and bids were evaluated by an international consultant.
It was more important, because the agreements were binding for 10 to 15 years. The government has set a target to produce 33.50 million barrel (mbbl) crude oil and 1.473 trillion cubic feet (tcf) natural gas through domestic resources during the year 2018-19. The indigenous gas supply will be supplemented through liquefied natural gas (LNG) imports to the tune of 9.0 million ton, while the supply demand gap in both oil and gas sectors will be met through import of crude oil and petroleum products. Gas exploration and production (E&P) companies have planned to drill 90 wells in different areas across the country. Under the plan, as many as 50 exploratory and 40 development wells would be drilled to make the country self sufficient in the energy sector. During the last five years the E&P companies drilled 445 new wells, out of which 221 were exploratory, adding that the increased exploration activities resulted in 116 new oil and gas discoveries.
Besides accelerating efforts to achieve self sufficiency in production of petroleum products, the government has signed around 15 agreements and MoUs with different countries during the last five years to enhance cooperation in the field of energy.The production of petroleum products witnessed 12.31 percent increase during nine months (July-March) of the current fiscal year as compared to the corresponding period of the last fiscal year. According to latest data of the Pakistan Bureau of Statistics, the petroleum products that contributed in positive growth included motor spirits, output of which grew by 18.65 percent during the period under review. The production of high speed diesel grew by 13.56 percent, diesel oil by 28.10 percent while the output of furnace oil witnessed growth of 6.55 percent. Similarly, the production of Jute batching oil increased by 11.26 percent, Solvent Naphtha by 6.00 percent, while the production of LPG increased by 44.93 percent. The petroleum products that witnessed negative growth in production included jet fuel, output of which decreased by 0.31 percent, kerosene oil 12.26 percent, while the production of lubricating oil declined by 14.91 percent.
Meanwhile, the production of petroleum products increased by 30.11 percent during the month of March 2018 against the production of same month of last year
Khyber Pakhtunkhwa government achievement was opening six blocks dormant for the last 10 years which include Marwat, Kohat, Goragulto, Wali, Latamber and Paharpur. Accordingly 28, and 27 blocks are now active in rich hydrocarbon province of the country. The Khyber Pakhtunkhwa province is producing 50 percent of oil, 15 percent of natural gas and 25 percent of LPG per day total output of the country. The crude oil production which was 30,000 bpd in 2013 now increased to 53.000 bpd till 2017. KPOGCL joint venture have also discovered 30 mmcft natural gas and 700 bpd oil recently in Baratai block which would help meet the energy requirement of the country and save precious foreign exchange on imported oil. During the last four years the province has become the most attractive for the E&P national and multinational companies engaged in exploring hydrocarbon in various areas also providing jobs opportunities to the people.
To explore, harness the natural resources and overcome the energy crisis, the KP Oil and Gas Company is working on number of projects on fast track basis in order to accelerate Exploration and production activities in KP. KPOGCL is in fact a facilitator to all E&P activities and act as “One Window Operation” for promotion of Exploration activities in the Province. Two oil refineries with capacity of 40000, bpd and 15000, bpd are being setup in Kohat and Karak which would cater to the requirement of the country.
Similarly the number of Drilling Rigs becomes doubled compared to the previous regimes which have ultimately enhanced production. Due to this double figure of production and drilling activities the province received maximum shares on Royalty, Production Bonuses, CSR obligations funds and Training funds for the betterment of the masses of the KP. To reduce the unemployment in the province KPOGCL hired fresh and experienced Geologists, Geophysicts and Engineers on merit basis, thereby enhancing their professional skills, building capacity and competency.
It is to be noted that government has prepared a Plan “Vision 2025” for sustainable energy and Power supply though boosting exploration and production activities in the province. The Oil and Gas Regulatory Authority (Ogra) has proposed construction of 10 new oil storage facilities, having combined capacity of 304,445 metric tons petrol and 446,335 diesel, during the financial year 2018-19. Moreover, 10 new oil marketing companies are expected to be established next year for more effective supply of petroleum products across the country, officials said.
They said the government has imported 60.4 million barrel (mbbl) crude oil and produced 21.8mbbl oil locally during eight months of the current fiscal year from July to February to meet ever growing energy demand of the country. The annual consumption of petroleum products in the country remained around 26mt during the last fiscal year. The officials said the domestic crude oil met only 15 percent of the country’s total demand while 85 percent requirements were met through imports in the shape of crude oil and refined petroleum products. The indigenous and imported crude is refined by six major and two small refineries, they said. The government is making efforts to bring improvement in the existing refineries, as well as attracting foreign investment in the sector. The officials said, Byco Oil Pakistan Limited (Byco) had established an oil refinery in Hub, Balochistan, with the refining capacity of 120,000 barrels per day (5 million ton per annum) at a cost of $400 million.
Byco had also installed Single Buoy Mooring (SBM) facility for transportation of imported crude oil and petroleum products from ships to the storage tanks, they said.The capacity of the facility was 12mt per annum. While, Attock Refinery Limited (ARL) had started Euro II (0.05 percent Sulphur HSD), besides it installed an isomerisation plant and enhanced the production of motor gasoline. The officials said Pakistan Refinery Limited (PRL) had also installed an isomerisation plant in 2016 and since then its production of motor gasoline had doubled.Pak Arab Refinery Limited (Parco) was implementing a coastal refinery project at Khalifa Point, near Hub, Balochistan, which was a state-of-the-art refinery, having capacity of 250,000 barrels per day (over 11 million ton/annum). The project’s estimated cost is over $5 billion, while 1,811 acres land has been allocated for the purpose.
Pakistan is expecting at least seven billion rupees in investment from new oil marketing companies in building of storage infrastructure within the next three years, officials said, as growing demand of retail fuels is attracting investors to capitalize on the country’s low oil inventory capacity. Officials at the ministry of energy said that Ogra granted provisional or construction licences to 15 new companies, which are mostly local, to build storage infrastructure across the country. They are registered with the Securities and Exchange Commission of Pakistan.
In line with the government policy, every new company has to invest not less than Rs500 million on infrastructure development in three years from the issuance of provisional license, a ministry’s official said. The applicants are in the process of completing the pre-requisites for considering their requests for license. All such cases shall be processed once they complete the requirements as per applicable law, rules. Officials stressed the need of improvement in oil storage capacity across the country with each new oil marketing company required to develop oil depots and installations location wise to cater 20 days requirement.
Development of further storage infrastructure is very vital strategically, and plays fundamental role in supply chain as Pakistan is net oil importing country, an official of the energy ministry said. Presently, there are more than 7,000 retail outlets of OMCs operational in the country, according to the annual report 2016-17 of Ogra. There are around 10 OMCs with major ones including state-owned Pakistan State Oil, Attock Petroleum, Shell, Hascol, Parco and Byco. Umair Naseer, deputy head research at Topline Securities said there is need of further investment in OMCs sector as demand of retail fuels is increasing, while inventory holding capacity stands at less than a month.
He said sales of motor gasoline rose 13 percent to 4.91 million ton in the first eight months of the current fiscal year of 2017-18, while diesel sale increased nine percent to 6.04 million ton during the period. Actually, an inventory capacity for motor gasoline is for 15 days and since the demand is growing there is need for further investment in storage, Naseer said. The ministry’s official said government is encouraging the new firms to give priority to rural areas while developing infrastructure. “As per government policy, the licencees are required to focus in far flung areas.
Naseer of Topline Securities said China-Pakistan Economic Corridor’s (CPEC) route would be attractive for new oil companies to establish outlets. A government document indicated that oil marketing companies are expected to start construction of oil depots at Gujrat, Okara, Hub, Gatti, Vehari and Benazirabad, while some of them are nearing completion at Keamari, Amangarh (Nowshera), Thalian, Kotla Jam (Bhakkar), Machike, Sahiwal, Habibabad and Quetta. The federal government will set up Institute of Petroleum Technology at a cost of Rs 2 billion in district Karak of Khyber Pakhtunkhwa, after the project was approved by the Central Development Working Party (CDWP).
The project, Institute of Petroleum Technology, which was approved in meeting held under the chairmanship of Deputy Chairman Planning Commission Sartaj Aziz, will benefit all the provinces by generating much-needed specialised workforce for oil andgas exploration industry. This institute will be state-of-the-art institute in imparting quality education. Such institution will be established for the first time in Pakistan with affiliation with international organizations like IWCF, API, SPE and AAPG. The Institute of Petroleum Technology will not only create quality graduates but would also help in increasing oil and gas production which will ultimately contribute to national economy and foreign exchange.
The institute is designed to offer 3 years Diploma of Associate Engineer and highly specialized 1 year and 6 months certifications from International Wefi Control Forum, American Petroleum Institute (API) etc, not presently offered in Pakistan. The institute will be primarily for specialized certification like drilling and seismic and solution to oil and gas exploration business. With the recent discoveries, Karak is hub of oil and gas and this institute will develop infrastructure and will create thousands of job opportunities. By spending Rs2 billion on this institute, specialized oil and gas professionals will be produced who will work on modern drilling rigs and repatriate Rs3.5 billion per annum in foreign exchange. This viable and sustainable link between government, oil industry and academia services to oil industry will be offered on commercial basis. The institute will be established in government rented buildings. There is a big demand for specialized skilled drillers due to high smart technology being employed in drilling rigs and seismic works. These specialized skills will help in capacity building to avail opportunities within the country and abroad, especially Middle East.
Sales of petroleum, oil and lubricants (POL) fell 30 percent to 1.64 million ton in July as rise in international commodity prices and subdued furnace oil demand down the sale, brokerages reported. The brokerages, citing data of Oil Companies Advisory Committee, said POL sales were recorded at 2.31 million ton in the corresponding month a year ago. Faraz Abbas at Taurus Securities Limited said. Furnace oil sale dipped 59 percent to 350,721 ton in July over the same month a year earlier, while sales of motor spirit and high speed diesel decreased 0.5 percent to 613,962 ton and 19 percent to 614,106 ton, respectively.
In motor spirit sector, Pakistan State Oil (PSO) maintained its market leadership with market share of 37 percent in July, down 3.3 percentage point’s, while Hascol’s market share was up 2.4 percentage points to 11.5 percent. In January-July, POL sales decreased 13 percent to 12.86 million ton. The interim government has decided to maintain the prices of petroleum products at the existing level during the month of August 2018.
Despite price increase recommended by OGRA due to the price hike in international market, the government has decided to keep the rates of petroleum products unchanged. said Finance Division. To keep the prices of petroleum products unchanged the government has reduced GST on HSD from 24 percent to 23 percent, on Motor Spirit from 12 percent to 9.5 percent, Kerosene from 12 percent to 6 percent, and on Light Diesel Oil from 9 percent to 1 percent. The decision has been taken to provide maximum relief to the common man.
The PML-N government at the end of its five year tenure on May 31 had left the monthly decision of setting new prices of petroleum to the caretaker government and decided that the existing prices may continue till mid-night of June 7, 2018. The caretaker government on June 11 had increased prices of petrol by Rs4.260 per liter, HSD Rs6.55/litre and Kerosene by Rs4.46 liter and LDO price by Rs6.14 per liter.
However, Petrol prices to remain unchanged by the Interim Government
The upcoming month of August 2018, as a result of Pakistani rupee devaluation. The proposals includes, to keep the prices same as of July 2018, and let the decision to be taken care by the incoming government which is more likely to be sworn in by the second week of August 2018. The caretaker government is emphasizing on the fact that they have done the price hike for petroleum related products for the month of July 2018, and there is an immense chance that the prices remain unchanged till the formation of the upcoming government. Presently, the government is collecting 12pc GST on petrol and kerosene, 24pc on HSD and 9pc on light diesel oil (LDO).
Moreover, the government is also charging Rs8 per liter petroleum duty on HSD, Rs10 per litere on petrol and Rs6 and Rs3 per liter on kerosene and LDO, respectively.

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