Oil, Gas and Refinery Projects update

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The National Electric Power Regulatory Authority on Friday announced approval of Indicative Generation Capacity Expansion Plan 2022-31 (IGCEP-2022) which notably says that the country will gradually stop using furnace oil RLNG and imported coal for electricity generation by 2031.

Furnace oil is expected to be phased out by 2031. Similarly, electricity generation from RLNG and Imported coal will drop to 2% and 8%, respectively, in 2031.

At the same time, there will be a substantial increase in the electricity generated by hydel, wind and solar PV.

 

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Due to high petroleum prices & inflation petroleum products sales by volume are -19% lower in January 2023 in comparison to January 2022.

Diesel sales are -23% lower showing severe downfall in economic & commercial activity in the country..

 

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ISLAMABAD: Pakistan would hopefully start receiving oil from Russia at cheaper prices by the coming April and modalities have been finalised in this regard, Petroleum State Minister Musadik Malik informed the upper house of the parliament on Friday.

The negotiations with Russia over the provision of oil at cheaper prices were finalised in 45 days, the minister told the Senate session, presided over by Chairman Sadiq Sanjrani.

Following these negotiations, an initial agreement was arrived at, the minister said, adding that a joint declaration was issued after successful negotiations between the two sides.


Pakistan will pay for Russian energy purchases in currency of friendly countries: Russian official

Russia has assured that it would provide oil to Pakistan at prices cheaper than it was offering to other countries, he said.

The commercial aspect of the oil deal between Pakistan and Russia would be finalised by next month (March), Malik said.

Moscow has also assured Islamabad that its petroleum products would reach here between 20 to 21 days, he stated, adding that talks with Russia for trade in different fields were also underway.

The oil agreement with Russia will help Pakistan meet its 20 percent crude oil import requirements, the minister said.

Malik said Pakistan cannot directly purchase oil and gas from Iran keeping in view sanctions imposed on the latter. Instead, he said, the focus is on promoting barter trade with Iran. Liquefied petroleum gas (LPG) is brought to Pakistan from Iran through barter trade, he added.

Speaking on the floor of the house, Power Minister Khurram Dastgir said, the federal government is bringing a policy on solar energy for the provision of cheaper electricity to the consumers using this technology.

The government, he said, intends to introduce solar energy as an alternative to fossil fuel.

Copyright Business Recorder, 2023

 

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Russia’s largest independent natural gas producer Novatek is ready to supply liquefied natural gas (#LNG) to#Pakistan as the country is scrambling for LNG cargo in the market to solve its energy sector woes, Russian News Agency reported on Monday.

The Company’s CEO Leonid Viktorovich Mikhelson told reporters that the company is willing to consider spot-based LNG supplies to Pakistan if the country resolves its tanker issues. “If they [Pakistan] solve the issue with the tanker fleet, then we will be ready to consider spot deliveries,” the top executive said

 

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Gas tariffs increase in a strange way!
Domestic heavy users will pay Rs3100 & Bulk users Rs1600.
Price increase is more for exports industries 34% & lower for non-export industries 14%.

 

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Petrol soars to Rs272 per litre as govt hikes prices of petroleum products​

Tahir Sherani
February 16, 2023


Hours after tabling a finance bill in parliament to revive a stalled International Monetary Fund (IMF) loan programme, the federal government on Wednesday increased the price of petrol by Rs22.20 and high speed diesel (HSD) by Rs17.20.

According to a press release issued by the Finance Division, a copy of which is available with Dawn.com, the prices of kerosene and light diesel oil were also increased by Rs12.90 and Rs9.68 respectively.

The new price of petrol is Rs272 per litre while HSD will cost Rs280 per litre. Kerosene will be available at Rs202.73 whereas LDO will be sold at Rs196.68 per litre.

“Increase in price is due to Pakistani rupee devaluation applicable for the calculation of current pricing period,” the press release said, adding that the prices would be effective from February 16 (Thursday).

The government is in a race against time to implement new tax measures and reach an agreement with the IMF as the country’s reserves have depleted to a critically low level of $2.9bn, which experts believe is enough for only 16 or 17 days of imports.

The agreement with the IMF on the completion of the ninth review of a $7bn loan programme would not only lead to a disbursement of $1.2bn but also unlock inflows from friendly countries.

Earlier today, Finance Minister Ishaq Dar tabled a crucial bill aimed at fulfilling the IMF conditions in parliament. The bill proposes increasing general sales tax (GST) from 17 per cent to 18pc as well as increasing the federal excise duty on cigarettes, sugary drinks and cement.

Meanwhile, a senior economist with Moody’s Analytics told Reuters on Wednesday that inflation in Pakistan could average 33 per cent in the first half of 2023 before trending lower, and a bailout from the IMF alone is unlikely to put the economy back on track.

“Our view is that an IMF bailout alone isn’t going to be enough to get the economy back on track. What the economy really needs is persistent and sound economic management,” senior economist Katrina Ell said in an interview.

“There’s still an inevitably tough journey ahead. We’re expecting fiscal and monetary austerity to continue well into 2024,” she added.

 

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Pakistan will soon send a delegation to Iran for talks on the Iran Pakistan Gas Pipeline (IPGP) project.

The delegation will mostly comprise officials from the Ministry of Energy, while officials from the Ministry of Finance and the Ministry of Foreign Affairs are expected to join the delegation, diplomatic sources.

According to sources, the delegation will discuss the penalty for the gas pipeline project’s delay with Iranian authorities. Pertinently, Pakistan has to complete its section of the IPGP project in its borders by February-March 2024 or face an $18 billion penalty for violating the agreement.

 

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The first oil cargo from #Russia is expected to arrive in Pakistan by the end of April after the latter agreed to the former’s demand to import a single cargo first as a test case to bridge “trust deficit”.

Moscow has already offered to export 100,000 barrels of crude oil per day to Islamabad.

Following Saudi Arabia that also exports around 100,000 barrels of oil per day, Russia will emerge as the second largest crude oil supplier to Pakistan if the both the countries sign a deal.

Sources told that Russia had raised doubt “over the seriousness of Pakistan to mature the oil deal”. Therefore, in a recent meeting held between the two countries, Moscow had asked Islamabad to import “one oil cargo” as a test case.

The sources said that Russia had heavy crude oil but Pakistan lacked the technology to refine such oil, therefore, it agreed to export blended oil to the country.

However, Moscow asked Islamabad to import “one crude oil cargo” first to exhibit trust in the oil deal.

Following Russian demand, sources said that Islamabad agreed to import “one crude oil cargo” by the end of April this year, paving way for a bigger deal.

 

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Mari Petroleum Company Limited (MARI), one of Pakistan’s top energy companies, announced the successful phased commissioning and performance testing of Sachal Gas Processing Complex (SGPC) Phase-II gas processing facilities in Daharki, Sindh.

The development was shared by the company in a notice to the Pakistan Stock Exchange (PSX) on Thursday.

“We are pleased to inform that after the successful completion of construction activities of SGPC Phase-II, the phased commissioning and performance testing of the gas processing facilities is now complete,” read the notice.


“Post integration of SGPC Phase-I & II and after commissioning of the remaining wells which is ongoing, the plant will reach its full potential in due course,” added the company.

The firm shared that at present, around 95 million standard cubic feet per day (mmscfd) of pipeline specification gas is being supplied to the Sui Northern Gas Pipeline Limited (SNGPL) via its 20-inch, 25km long, cross-country gas transmission pipeline connecting SGPC to the SNGPL valve assembly (QV-2) at Muhammadpur in Punjab.

 

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Pakistan to receive first cargo of Russian crude in April: Musadik Malik​

• Pakistan will receive one-third of its crude oil imports from Russia at concessional rate, says minister for petroleum

BR Web Desk
March 17, 2023

Pakistan will receive its first cargo of crude oil from Russia in April, State Minister for Petroleum Dr Musadik Malik said, as the South Asian country battles an economic crisis.

“Our commercial deal is in the final stages, and by the month of March the entire commercial deal will be negotiated,” he said.

“In April, we will give them the first shipping order. The first cargo of crude oil from Russia will arrive in by the end of April,” the state minister told the private channel.

The minister said that the country will receive one-third of its crude oil imports from Russia at a concessional rate “the impact of which will be translated to the people.”

On Wednesday, the government yet again increased the prices of all petroleum products by up to Rs13 per litre for the next fortnight.

On the latest price hike, the minister said the government pays dollars for oil, and at the moment the country is short of it. “Oil prices are dependent on ongoing international prices and the currency parity,” he added.

The minister shared that Pakistan imports $2 billion to $2.5 billion of energy commodities per month. “If we give subsidy on it, the entire liquidity of the country will be drained off,” he said.

 

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Govt announces fuel subsidy of Rs50 per litre for low-income families​

Prime Minister Shehbaz Sharif announced on Sunday that the low-income segment of the country will be given a subsidy of Rs50 per litre as part of the petroleum relief package, Aaj News reported.

The decision was made at a meeting chaired by Prime Minister Muhammad Shehbaz Sharif in Lahore.

Chairing the meeting, the premier said that the consumers using small vehicles including motorcycles, rickshaws, and 800 CC vehicles be included in the petroleum subsidy.

He directed all relevant authorities to finalise a scheme at the earliest, for effective implementation of the subsidy.

He said despite severe economic difficulties, the government is trying to help the poor in every possible way.

Minister of State for Petroleum Musadik Malik briefed the meeting about the strategy to implement the petroleum subsidy for low-income people.

PM Shehbaz believed the petroleum subsidy will directly lead to relief for the poor.

The government's decision comes days after it increased petrol prices again by Rs5 per litre, taking it to Rs272.00 per litre.

 

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Pakistan to place order for Russian oil next month: minister​

Dawn.com
April 2, 2023

Minister of State for Petroleum Musadik Malik has said that the government will place its first order for Russian crude next month and it would take about four weeks for the commodity to reach Pakistan.

Finance Minister Ishaq Dar last year had said that the country was considering buying discounted Russian oil, pointing out that neighbour India has been purchasing oil from Moscow and Islamabad also had a right to explore the possibility.

Subsequently, Malik had flown to Moscow for talks on issues including oil and gas supplies after which the government announced that it would purchase discounted crude oil, petrol, and diesel from Russia.

In January 2023, a Russian delegation arrived in Islamabad for talks to finalise the deal. During the three-day meeting, the countries decided to address all technical issues — insurance, transportation and payment mechanism — to sign an agreement by late March this year.

“After consensus on the technical specifications achieved, the oil and gas trade transaction will be structured in a way it has a mutual economic benefit for both countries,” a joint statement issued by the two sides had then stated.

 

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Setting up of big refinery in Balochistan: proposals sought​

• CSG and a Chinese consortium are coordinating to setup a 10 million MTPA refinery project in Pakistan

Mushtaq Ghumman
April 12, 2023

ISLAMABAD: The Board of Investment (BoI) has sought response to questions from concerned Ministries posed by a consortium which intends to set up 10 Million Tons Per Annum (MTPA) refinery in Balochistan.

Capital Strategies Group (Pvt.) Ltd (CSG) is a leading trading house based in Pakistan. The company is working as one of the premier companies in the country representing multinational firms in energy, infrastructure, vertical transport, cement, fertilizers and defence sectors.

CSG and a Chinese consortium are coordinating to setup a 10 million MTPA refinery project in Pakistan.

In order to finalize the project outline, the company has sought further details and information such as:

(i) are both Gwadar and Karachi available for crude oil import and finished product export;
(ii) is there enough electricity supply for the refinery (200 MW) possible location of Hub/ Karachi/ Gwadar;
(iii) if the company opts for captured power what locations are suitable for coal imports;
(iv) any incentives regarding the tax for investors or duty free import of machinery;
(v) is there a government pre-approved list of industries for Chinese investors;
(vi) is there any potential local off-taker? Will the local OMCs act as off-takers for this product;
(vii) is there any existing industrial zone with enough land for the refinery;
(viii) is there is an industrial zone in Gwadar/ Hub/ Karachi where the company can take advantage of investment incentives; and
(ix) what are the licensing and regulatory requirements needed to put up an oil refinery?

BoI, in its letter to Petroleum Division, Power Division, Federal Board of Revenue (FBR) and Ministry of Industries and Production (MoI&P) has requested additional information so that the company is facilitated to invest in the establishment of the refinery.

 

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Pakistan has become the latest Asian country to import Russia’s discounted crude oil, joining India and China which are importing heavily from Moscow following its invasion of Ukraine.

Petroleum minister of Pakistan Musadik Malik told Reuters that Islamabad has placed its first order for crude oil after striking a new deal with Russia and the cargo will dock at Karachi port in May.

Under the new deal struck with Moscow, the South Asian nation’s imports are expected to reach 100,000 barrels per day if the first transaction goes smoothly, Mr Malik said on Wednesday.

"Our orders are in, we have placed that already," Mr Malik said