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ISLAMABAD: The country’s oil supplies are facing serious disruption due to pipeline and port congestion, forcing oil companies to go against standard operating procedures amid acute storage constraints.

Consequently, stocks of the two main petroleum products — motor gasoline and high-speed diesel — are short of the mandatory strategic levels, at a time when the country’s borders are in a state of heightened tension, sources told Dawn.

Sources said the Ministry of Defence had repeatedly called on the quarters concerned to increase supplies for strategic reserves. But both the government and the oil industry have repeatedly asked the ministry to speed up clearance of requests for construction of additional storage capacity.

A total of 51 applications from six oil marketing companies (OMCs) who want to build storage depots in various parts of the country have been pending with the ministry. “If all the no-objection certificates (NOCs) are issued today, it will take at least a year to clear the storage capacity backlog. This is a very serious issue in terms of energy security,” a former petroleum secretary told Dawn.

A government official said the petroleum ministry had been asking the defence ministry to formulate a time-bound mechanism for granting the NOCs to marketing companies to build new storage facilities.

Blame put on high demand, lack of storage capacity and port congestion

The issue has repeatedly emerged in the monthly product review meetings (PRMs) between representatives of the Ministry of Petroleum and Natural Resources, oil refineries and the OMCs.

“There is no product shortage anywhere in the country, but stocks of petrol and high-speed diesel are short of the mandatory 20-day requirement,” a government official said, adding that petrol was short by about 257,000 tonnes, while the high-speed diesel shortfall was about 315,000 tonnes.


The official said the petroleum ministry’s director general oil had been requesting the refineries and the OMCs to increase inventory levels. In addition, the Pak-Arab Pipeline Company (Papco) — a subsidiary of the Pak-Arab Refinery (Parco) — has been regularly complaining that the OMCs are misusing oil pipelines for storage.

Papco and Parco complained that the “white oil pipeline (WOP) system was choked and the OMCs were using it as storage system. The WOP system is a transportation system and not a storage system”. Papco explained that quantities well in excess of expected sales were loaded into the pipeline system and not being taken out by the OMCs.

Consequently, it is becoming difficult for the authorities to ensure smooth berthing for incoming oil ships. The Oil Companies Advisory Council (Ocac) — on behalf of the refineries and the OMCs — has been demanding the supply of regular data about stocks in the pipeline system so that member companies could be persuaded to withdraw their products quickly.

For example, officials said, at least three petrol-bearing vessels could not avail their Sept 24/Sept 29 ‘laydays cancelling’ — or laycan for short — due to jetty constraints.

A laycan is the window during which the ship owner must tender notice of readiness to the charterer that the ship has arrived at the port of loading and is ready to load for berthing. This is usually expressed as two dates.

In addition, seven vessels carrying high-speed diesel missed their Sept 5/Sept 28 laycan due to ullage issues, such as evaporation or loss during transportation.

At one point in October, 12 to 15 vessels were waiting for berths off the port due to congestion.

But Ocac managing director Dr Ilyas Fazil said that port and pipeline congestions were “not of an extraordinary nature. These are normal occurrences”. He said that laycan dates could be advanced or delayed, depending on the prevailing circumstances and claimed that proper SOPs were followed while transporting products through the WOP.

He said that when diesel vessels berthed at the Fauji Oil Terminal Company (FOTCO), the WOP management was consulted. In case of space constraints, product injection into the pipeline was delayed for a day or two.

Justifying the shortfall of fuel reserves from strategic levels, he claimed that the demand for both petrol and high-speed diesel was currently on the rise.

He said the issue of increasing storage capacity pertained to the Oil and Gas Regulatory Authority, adding that PSO and Hascol had recently increased their storage capacities.

Published in Dawn November 21st, 2016

Comments (28) Closed

shoaib Nov 21, 2016 08:17am

We have our own problems so very different from the rest of the world. The perks of getting Shareefs and Zardaris as our rulers...

on Nov 21, 2016 09:49am

CPEC will be a solution to all as it will enhance trade routes and the pipeline network. Then such issues will be history

Imtiaz ali khan Nov 21, 2016 10:56am

@on CPEC has to be tested needs good leadership on our part to say our voice before, during and after project. It's good to be friend with China but at the same time national integrity needs to come first.

Shabbir Kazmi Nov 21, 2016 11:22am

No reasons, except bad management by the concerned ministry. The blame should also go to the government and PM for not paying due attention to strategic issues.

Deal With it Nov 21, 2016 11:38am

Real Problem is that "no credit is available". Plus ofcourse no refineries to process the donated Oil from Arabs!

Mahmood Nov 21, 2016 11:40am

Again thanks to wonderful NS government! While he doles out hunting licenses to Arab Princesses, he cannot even ask them to supply oil to Pakistan to maintain strategic levels?

Oil reserves at record lows; national debt at record high? Complete opposite of what should be for a viable healthy economy!

Sab Se Pehle Pakistan Nov 21, 2016 11:47am

Another example of incompetence of the PML-N government. The country is on verge of bankruptcy for God sake.

Mumbai Based Nov 21, 2016 11:51am

Just a temporary problem

Aliali Nov 21, 2016 11:53am

@on CPEC will drown Pakistan in debt

Hameed Nov 21, 2016 12:22pm

Yesterday i heard that sindh govt has given the contract of picking up the garbage in karachi to a Chinese company. If we can't even pick up our own garbage then we shouldn't be surprised by this news.

Anees Nov 21, 2016 12:31pm

High demand, lack of storage, port congestion hence lack of Strategy by the Ministry. He is only concerned about keeping his airline afloat, all talk no practice. When will we learn to sack such beast of burdens?

DJ Nov 21, 2016 12:45pm

I can not fathom how such information got my opinion any info regarding strategic importance should be kept secret and dealt by the authorities only.

Shakeel Nov 21, 2016 12:54pm

At a time when all country's borders are surrounded by external threats, while our institutions are busy in a blame game.They must keep aside their differences and concentrate on problem considering the existing security situation of the country.

Justice Nov 21, 2016 12:58pm

Even the fuel stock like nukes has to be strategic.

Muhammad Saleem Munshi Nov 21, 2016 01:06pm

Why applications for increasing storage capacity are pending. If granted in time congestion issue would not have occurred. Also OMCs are hampered and remain under severe liquidity strain due to delayed payment of Government receivables including Price Differential claims Sales tax refund on exports Inventory losses on price decrease Loss due to fluctuation in exchange rates and lastly the IFEM mechanism practiced nowhere else in the world. Its time now for moving towards deregulation of IFEM and Margins.

D SHAHA Nov 21, 2016 01:41pm

If such situations are not corrected it will badly affect road traffic on CPEC ..Bad planning will only cause losses . Lot depends on the success of the CPEC

Vague Buster Nov 21, 2016 02:09pm

well high demand for petrol means good news

k .jatt Nov 21, 2016 02:24pm

CPEC is going to suck major manufacturing jobs and the we do not need much fuel

Dr. Salaria, Aamir Ahmad Nov 21, 2016 02:58pm

According to the basic rule of management, a smart management is the one which keeps a smart balance between supply and demand.

Zafar abbas Nov 21, 2016 04:18pm

The issue of LDA NOCs for New Oil Storage Terminals at Machiney / Sheikhupura, Lahore is pending for almost 2 years, as these NOCs will only be issued after the approval of Lahore Master Plan by the provincial Govt. OMCs are holding land parcels in the vicinity of PARCO Storage Terminal at Machikey to build & connect their storage, but awaiting issuance of NOCs since long. OGRA / Ministry is requested to look into these inordinate delays by the provincial authorities. These planned storage terminals will add considerably to existing capacities.

Naeem Nov 21, 2016 05:08pm

And the Reserves of Sharif Family are all time high !!!!

Bikram Nov 21, 2016 05:40pm

@Dr. Salaria, Aamir Ahmad Did you get your degree of doctorate through management course. Just want to add my knowledge.

D HEROLD (USA) Nov 21, 2016 05:42pm

51 applications from 6 OMCs who want to build storage depots in various parts of the country have been pending with the ministry and even if all the NOCs are issued today, it will take at least a year to clear the storage capacity backlog.

Is there any other peer country where the situation has ever come to this level? Thanks to China. At least CPEC will put the things right !

D SHAHA Nov 21, 2016 06:12pm

@Dr. Salaria, Aamir Ahmad One should be smart.Lack of concern is due to being over smart.

zak Nov 21, 2016 07:31pm

why? Kick out the corrupt and the country will start working well. Disgraceful state of affairs, where is the PM?

Sajid Khan Nov 21, 2016 08:48pm

Where are our friends in Saudi and China

Adil Jadoon Nov 21, 2016 10:56pm

Thank you Pakistani people, you are responsible for this!

Babar Nov 22, 2016 08:31am

Need to have an educated person with financial background as minister