ISLAMABAD, Feb 8: The federal government has directed oil companies not to close down, for the time being, their existing depots due to prevailing emergency situation.

This has come following a demand to reduce the number of oil depots from 29 to 10. POL products are currently supplied at these 29 points at rates fixed by the oil companies. After these depots, the stand prices would be deregulated and would vary from pump to pump.

Official sources told Dawn that government has estimated an expenditure of Rs15 billion to provide 45 days cover to the country’s strategic oil reserves.

Till September last year, Pakistan had a maximum of 19 days equivalent of strategic oil cover. Secretary Petroleum M. Abdullah Yousaf, however, told Dawn that storage capacity has since been increased to 30 days with some re- arrangements.

The sources said that under a directive from the chief executive secretariat, the petroleum ministry carried out a study that suggested an additional storage of 700,000 tons of high speed diesel and motor spirit was required to meet 45 days of strategic needs.

An amount of Rs5 billion was required as capital expenditure to build storage while another Rs10 billion to maintain additional stocks.

The oil companies have, however, been asked to provide for government’s consideration a working plan for the long run if they desired readjustment in their business strategies viz-a-viz closure of depots at one place and opening at some other location.

Soon after September 11 incidents and later Indian army build-up on Pakistan border, the petroleum ministry was directed to remain extra vigilant about demand and supply position of petroleum products and augment the reserves position.

From any standard and point of view the strategic oil reserves must not be less than 30 days’ equivalent under normal circumstances, the officials said. As this required sizable investment, the government was looking into various options to increase the storage capacity to 45 days.

Official sources, however, ruled out any affect of prevailing regional situation on Pakistan’s fuel position or disruption in oil supplies as it had long term and secure supply arrangements with friendly countries like Saudi Arabia and Kuwait and was now reinforcing supply sources from Qatar and UAE as well.

Pakistan’s annual oil import bills is around $3 billion as total consumption ranges to around 20 million tons. The consumption was currently on the decline.

Annual crude oil requirement is around 5.5 million tons at the rate of around 100,000 barrels per day. This includes around 55,000 bpd of Arabian light, about 25,000 bpd of Iranian light and about 10,000 bpd of Upper Zakum.

Total furnace oil requirement is around 8 million tons of high speed diesel followed by comparatively small quantities of kerosene and other products.