Petroleum Division says import of oil from Iran through barter trade possible

ISLAMABAD   -   Petroleum Division has said that import of oil from Iran through barter trade is pos­sible, however, it asserted that Pakistan doesn’t have enough goods to provide to Tehran in exchange of the fuel import.

The Senate Committee on Pe­troleum, which met with Sena­tor Umer Farooq in the chair, was further informed by the of­ficial of the Petroleum Division that the government has decid­ed to once again start offshore oil and gas exploration. It has been decided to grant licenses for 24 blocks for oil and gas exploration in the sea, Director General Petroleum Concession said while briefing the com­mittee. The bidding process for these offshore blocks will com­mence in January 2025, he said. 

On circular debt of the gas sector, it was apprised that it has reached Rs 2897 bil­lion, including Rs 2083 billion principal and Rs 814 billion LPS (late payment surchage). Three companies account for 95 percent of the total circu­lar debt of the gas sector, of­ficials said. OGDCL, PSO and PPL circular debt is Rs 2752 billion, the official informed. The receivables of OGDCL ares Rs 1133 billion, PSO Rs 816 billion and PPL Rs 803 billion, he added. Commenting on the circular debt of the PSO, Sena­tor Raja Nasir Abbas said that PSO is so generous. “It’s not like that, we’re stuck,” Manag­ing Director PSO responded to the comments by the sena­tor. PSO receivable against Sui Northern Gas Pipeline Limited is Rs500 billion, Rs 190 billion from power sector and Rs 28 billion from PIA, MD explained. 

From 2013 to 2023, there was little or no increase in gas prices by the successive governments that had resulted in accumula­tion of huge circular debt, Di­rector General Gas said. He said that Rs 1700 billion were added to the circular debt due to dif­ference in the sale and purchase prices of gas. However, he said that owing to the increase in gas prices, the accumulation of circular debt of gas has stopped.

On the issue of oil import from Iran, official of the Petro­leum Division informed that barter trade with Iran may be possible. Petrol can be import­ed, but there are not enough valuable items to export to Iran in exchange, the official said. Senator Raja Nasir Abas said that Iran is importing steel worth $1.7 billion from Brazil. He said that Pakistan can also import oil from Iran under bar­ter trade. Official of the Petro­leum Division responded that the matter of barter trade from Iran is being looked into by the Ministry of Commerce.

Managing Director PSO said that grades of Iran’s refineries are lower as compared to the fuel used in Pakistan. The Com­mittee raised objections over the absence of the vacant post of MD OGDCL for the past few months and directed to provide committee the details on vacant MD and BoD positions in these companies. Additionally, the Committee was informed about the current usage and demand for oil and gas in the country. The DG Gas reported that the country’s daily consumption of gas and oil is around 3,200 MM CFT and 7,000 million barrels, respectively. However, the total reserves of oil are approximately 192.93 million barrels, and gas reserves are about 18,108.77 BCF. Sindh holds the highest share of gas at 64%, and Khyber Pakhtunkhwa has a 42% share in oil, according to the 2023-24 data (May 2024). Secretary Pe­troleum Division, Momin Agha highlighted that out of the to­tal 3,200 MM CFT of gas, 200 MM CFT is used for production, 1,400 MM CFT is utilized by fer­tilizer and power companies, and the remaining 1,600 MM CFT is allocated for domestic purposes. Thus, the total avail­able gas is 3,000 MM CFT. 

The Committee recom­mended that complete details of gas consumption by prov­inces relative to their produc­tion be submitted at the next meeting. Moreover, the Com­mittee discussed development initiatives undertaken by gas companies to uplift less de­veloped areas adjacent to gas sites. Officials informed that the ministry has mandated oil and gas companies to spend a minimum of $30,000 on so­cial welfare projects, primar­ily for clean water, education, and healthcare. The amount allocated for social welfare is directly related to oil and gas reserves. Furthermore, the Senate Committee deliberated on the bill titled “The Pakistan Minerals Regulatory Authority Bill, 2024”. Senator Mohammad Abdul Qadir, the bill’s mover, stated that while the coun­try has vast mineral reserves, it has not benefitted due to a lack of coordination between the federal and provincial gov­ernments. He added that the primary objective of the bill is to create cohesion between the center and provinces on this issue so that the potential of the minerals sector can be fully utilized and transformed into a value-added commodity for the national economy. Sec­retary Petroleum apprised the Committee that the ministry is working on the “Harmoniza­tion of Minerals Laws” with the provinces, and the implemen­tation plan will be finalized by the end of September 2024.

Additionally, the Committee was briefed by the MDs of Sui Southern Gas Company Lim­ited (SSGCL) and Sui Northern Gas Pipeline Limited (SNGPL) on their operations and per­formance. The MD of SSGCL reported that the primary role of SSGCL is the transmission, distribution, and sale of natu­ral gas, and currently, SSGCL serves approximately 3.2 mil­lion customers. He added that SSGPL sources its supply from 11 sites on the left bank of the Indus and 8 sites on the right bank. However, indigenous gas reserves are depleting by 10% annually. Moreover, the MD of SNGPL informed the Committee that SNGPL serves 7.4 million customers and earned a profit of around 10.37 billion in 2022 after tax. The Committee decided to have an exclusive briefing on Reko Diq at the next meeting.