ISLAMABAD, Jan 9: Pakistan has secured around 50 per cent of its total $3.5 billion oil imports on deferred payments from Saudi Arabia and Kuwait for the calendar year 2003.
Informed sources told Dawn on Thursday that total oil imports on deferred payments from the two friendly Islamic oil producers would cross $1.8 billion mark during the current calendar year under the revised agreements.
Director General Oil of the petroleum ministry Sabir Hussain left here on Thursday for Saudi Arabia to sign a formal agreement with the kingdom for uninterrupted oil supplies worth $1.3 billion on deferred payments for the whole year.
The visit is a follow-up of successful talks between Prime Minister Mir Zafarullah Khan Jamali and Saudi top leadership a few days back. The Saudi authorities had asked the prime minister to send technical officials to formally sign the agreement, terms and conditions which were finalized afresh.
The agreement would be effective for oil supplies by Saudi Arabia for the period January 1-December 31, 2003, and would cover only crude imports for Pakistan Refinery Limited (PRL), and National Refinery Limited (NRL), a source privy to Pakistan-Saudi negotiations said. The earlier special facility expired on the last day of December, 2002, he added.
Meanwhile, Kuwait has also agreed to supply furnace oil on 60-day deferred payment basis as their existing 90-day late payment arrangement expired on December 31, 2002, official sources told Dawn.
Kuwait has historically been supplying most of the petroleum products to Pakistan through Kuwait Petroleum Company (KPC) on 30-day payment mode. Most of the KPC’s oil supplies business has been taken over by Pakistan State Oil (PSO) following deregulation of the petroleum sector by the government two years back although most of the furnace oil and some other products still come from Kuwait.
The payment period was extended to 90-days on the request of former petroleum minister Usman Aminuddin for over two years.
The agreement on 90-day payment basis has now expired and rescheduled on 60-day basis for the period from January 1 to December 31, 2003, the source said.
Prime Minister Jamali during his visit to Saudi Arabia early this month had requested the kingdom to make special arrangements for uninterrupted oil supplies in case of a possible US war on Iraq besides extending the deferred payment facility till next year.
Pakistan’s total oil imports of around 20 million tons are expected to cross $3.5 billion by the end of current fiscal year and could go further up in case the prevailing international price trend continued, officials said.
Pakistan wants to curtail the oil import bill and ensure such arrangements that could help it absorb supply and foreign exchange shocks in case of a US war on Iraq.
Pakistan’s major suppliers, notwithstanding the petroleum sector deregulation, are Saudi Arabia and Kuwait that together provide around 90 per cent of total oil imports, partially on special terms.
Saudi Arabia provided $2 billion oil to Pakistan on deferred payments in 1998 and 1999 on the special request of the then Prime Minister Nawaz Sharif following sanctions imposed against Islamabad by the world community in consequence of the nuclear tests.
A major portion of this amount was later converted into a grant and the facility was extended time and again and continued till last year.
Pakistan’s crude oil requirement is around 5.5 million tons at the rate of around 100,000 barrels per day (BPD). 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 annual furnace oil requirement is around 8 million tons, followed by 6 million tons of high speed diesel and comparatively small quantities of kerosene and other products.
