Recent key developments in Pakistan’s oil sector underscore that there is a need for the country to maintain its strategic oil reserves at all times. Shortages of the commodity became evident when Covid-19 started spreading around the world. At the point, when world oil prices had fallen drastically, there were reports that the Pakistan government was considering the import of oil at those prices. However, later when the oil prices decreased, there was no extra oil storage capacity in the country. Had such capacity existed, the government could have stored cheap oil in bulk quantities and sold the oil strategically when the lockdown eased and demand rose again.

Though the Covid-19 pandemic has affected everything around the world curtailing economic activity, there is hope that consumption of various oil products will rise again as the Prime Minister of Pakistan has announced easing the COVID-19 lockdown restrictions across Pakistan gradually, starting May 9, 2020. Small businesses and transport are reopening to partially revive the economy. Similarly, many other nations have also eased restrictions and strict SOPs will be followed everywhere. Flight operations are also opening Considering what the future will hold for the oil industry, a lot will depend on how crude oil prices perform in the midst of lockdown dynamics – the new norm that the world will now have to live with. Major oil and gas service companies in Pakistan have reduced their costs using different strategies while measures are taken to provide relief to the local oil and gas industry from the adverse effects of COVID-19.

What is now needed even more is the deregulation of prices and privatization of assets as deregulation would smooth costs and profit margins in the long run. This would enhance transparency, enabling decision-makers to identify steps that require priority attention while ensuring that the kind of choked supply situation the country ran into does not happen again.

SYED OVAIS AKHTAR,

Karachi.