ISLAMABAD, Oct 16: Pakistan is seeking a two-year extension in the Special Oil Facility (SOF) amounting to around $1 billion from Saudi Arabia, a finance ministry official told Dawn on Thursday.
This will be one of the important topics of discussions between the leadership of the two countries during the visit of Saudi Crown Prince Abdullah bin Abdul Aziz who arrives here on Saturday, the official said.
The existing Saudi Oil Facility for Pakistan expires on December 31, 2003. Pakistan now wants supply of about 50,000 barrels of crude oil under the SOF for two years i.e. December 2005, he said.
The prime minister, said the official, had also discussed the issue with the Saudi authorities during his recent visit the Kingdom.
Finance Minister Shaukat Aziz has been assigned to prepare talking points for discussions with the Crown Prince and his team. A big group of businessmen will also accompany the Saudi leader.
The official said Pakistan would also encourage the Saudis to buy Pakistan State Oil. The Saudi company Midroc is one of the three bidders of PSO. Kuwait Petroleum Company (KPC) and Fauji Foundation are the two other bidders.
Saudi Arabia, on its part, is said to be interested in engaging Sui Northern or Sui Southern or both in the development of its gas transmission system.
The oil imports under the SOF had amounted to Rs39 billion during the year 2002-03, but for the current year they are projected at Rs31 billion.
Pakistan’s total oil imports amounted to around $3.06 billion during 2002-03, up by around 10 per cent against oil imports for the year before partly due to a reduction in the SOF.
Pakistan’s major suppliers, notwithstanding the petroleum sector deregulation, are Saudi Arabia, the UAE and Kuwait. The two Kuwaiti companies — Bakri and Kuwait Petroleum Company — together provide around 90 per cent of total oil imports.
Total oil imports (both crude and POL) range around 20 million tons, of which KPC meets 75 per cent of high speed diesel and 25 per cent of furnace oil. The remaining requirement is met through imports from Saudi Arabia, most of the time on a special price and time-delay basis.
Saudi Arabia had provided oil worth $2 billion to Pakistan on deferred payments in 1998 and 1999 at the request of then prime minister Nawaz Sharif following sanctions imposed against Pakistan by the world community because of nuclear detonations. A major portion of this amount was later converted into a grant and the facility was extended in the subsequent years and continues till to date.
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 eight million tons, followed by six million tons of high speed diesel and comparatively small quantities of kerosene and other products.