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Pakistan has failed to attract foreign oil suppliers to set up bonded oil storage in the country due to flaws in the policy approved in 2023._x000D_
According to sources, the government is now amending the policy to create a conducive environment for foreign suppliers to store oil in Pakistan._x000D_
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Pakistan is the only country in the region that does not have strategic oil reserves, while strategic reserves have been established in neighboring India with the support of the United Arab Emirates._x000D_
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Petroleum Minister Ali Pervez Malik contacted all oil-producing countries and invited them to establish oil reserves in Pakistan, to which Kuwait was the first to show interest._x000D_
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Under the new policy, the government will have the first right to use oil from reserves managed by foreign suppliers, however, suppliers will also be allowed to export oil from these reserves._x000D_
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According to sources, Pakistan had allocated land for the Khalifa Oil Refinery and oil reserves to the UAE, but the UAE did not build these strategic reserves._x000D_
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Pakistan is now looking to Saudi Arabia, Kuwait and Qatar to set up oil and gas storage facilities. The Petroleum Division had briefed the Economic Coordination Committee on the policy of importing oil through customs bonded storage facility for foreign suppliers, which was approved on June 26, 2023._x000D_
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Later, all the relevant agencies issued their rules and regulations to implement the policy, but so far no foreign supplier has set up bonded storage under this policy._x000D_
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The ECC was informed that the country’s energy security vulnerabilities have become evident during the disruption in the Strait of Hormuz._x000D_
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To address this challenge, the Petroleum Division is focusing on key pillars of energy security, including promoting indigenous resources and building strategic petroleum reserves._x000D_
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The oil industry has warned that the proposed $6 billion investment in refinery upgrades could be affected by the ongoing changes in the pricing formula for petroleum products._x000D_
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The government is currently inviting foreign oil suppliers to invest in strategic reserves, but repeated changes in pricing and economic policies could deter investors from investing in the future._x000D_
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During the recent revision, the government changed the oil pricing formula, which resulted in an additional burden of Rs46 per liter on diesel and Rs11 per liter on petrol, causing refineries to suffer a loss of over Rs100 billion._x000D_
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Industry sources say that over the past one month, the disputed calculation has resulted in a loss of about Rs75 per liter on diesel and Rs35 per liter on petrol, which was borne by the supply chain and not passed on to consumers._x000D_
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A senior industry official said the figures are not disputed. When the correct premium and plate average prices are used, the results are completely different. The real issue is that the same methodology should be adopted consistently and uniformly._x000D_
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The dispute intensified when CEOs of major oil companies held an emergency meeting with Petroleum Minister Ali Pervez Malik and Petroleum Secretary Hamid Yaqoob and demanded immediate intervention. Another senior industrialist said the main problem is continuity._x000D_
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One formula is adopted when prices increase and another interpretation comes out when they decrease. The industry cannot operate under changing rules._x000D_
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The petroleum minister said his ministry had transferred the funds to OGRA on time and now the responsibility for payments lies with the regulator. He assured that OGRA would be directed to pay pending claims promptly._x000D_
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Industry representatives warned that the continued uncertainty in the pricing system could hinder future investments in storage, refinery upgradation and fuel distribution network.
