India offers to build pipeline to Wagah to export oil to Pakistan

[Sridhar]

29 May 2012



During the first day of technical-level talks today between the two countries in Islamabad, the Pakistani team indicated that it could import all petroleum products, including high-speed diesel, furnace oil, petrol and jet fuel, from India to meet its domestic requirements.

Pakistan has proposed to export naphtha – a surplus product – to India, which could be converted to petrol in India and then re-exported to Pakistan.

Pakistan's diesel consumption stands at 6.9 MT per year, of which production by domestic oil refineries stands at 3.2 to 3.4 MT with the rest being imported.

Pakistan's furnace oil demand stands at around 9MT, of which domestic refineries produce about 2.5MT with the rest being imported. Pakistan is in the process of setting up new power plants, which would increase demand of furnace oil over the coming years.

Pakistani and Indian officials would also discuss import of 200 million cubic feet of liquefied natural gas (LNG) per day from Delhi, deliveries of which could be initiated immediately.

According to Pakistani authorities, the import of LNG from Qatar and other countries like Malaysia would take three years, while supplies from India could start within six to eight months. (Also see: India in talks with Pak for export of petro products)

domain-b.com : India offers to build pipeline to Wagah to export oil to Pakistan

 

[Singh]

As long as Pakistan is paying cash, I am game for it. One of the reason why Pakistan is not able to meet its domestic demands is due to circular debt, and their reliance on fuel to generate electricity.

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It has not happened overnight but is an alarming development nonetheless, that the circular debt among energy companies has soared 465% in four years since the Pakistan Peoples Party-led coalition government came to power in March 2008.

"The power sector circular debt increased to Rs396.7 billion by March 15, 2012, which is Rs326 billion or 465.7% higher than the debt in March 2008," Petroleum and Natural Resources Minister Asim Hussain told the National Assembly on Thursday.

In a written reply to a question, the petroleum minister attributed the runaway debt to delay in payments by power companies for oil and gas.

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LNG to arrive in late 2013

Speaking during question hour, Hussain also said Pakistan planned to import 500 million cubic feet of liquefied natural gas (LNG) from Qatar, which was expected to begin in one and a half years.

An agreement to this effect has been signed with Qatar, but the price of LNG is yet to be decided between the two countries. However, Hussain said, the price would be in accordance with prevailing rates in the region.

Circular debt soars 465% in four years – The Express Tribune

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The Inter-corporate Circular Debt of the country is heading towards a trillion mark and power sector's receivables have reached at Rs 888.969 billion against the payable of Rs 620.169 billion with net difference at Rs 268.800 billion.

According to the government assessment, reasons of increasing circular debt are as government is not allowing full pass through of power tariff on consumers and is allowing only partial transfer of tariffs as determined by NEPRA.

Other main reason behind increasing Inter-corporate Circular Debt is explained, as power sector is unable to recover dues of electricity bills from provincial governments and federal government ministries, departments as well as from private sector.

Failure to reduce line losses is also causing huge loss and heavy line losses that at present level of line losses is 20 percent. Despite restructuring of power sector and reforms to reduce it's losses, incomplete corporatisation of power sector entities is also leaving things go further worse. Weak governance in the power sector entities is also causing financial drain. Costly fuel mix is putting extra financial burden to meet cost of fuel oil due to constant increase in the oil prices.

Inadequate oil handling facilities is leading to lesser supply of fuel that the required quantity. Dependence on expensive Thermal Generation due to decreased hydel power (hydel: 31 percent Thermal-RFO/Gas: 65 percent).

Daily Times - Leading News Resource of Pakistan

 

[Bangalorean]

Not just cash, they need to pay cash in advance. Can't put it past these beggars to throw up their hands and say they have no money to pay later.

 

[ajtr]

As long as Pakistan is paying cash, I am game for it. One of the reason why Pakistan is not able to meet its domestic demands is due to circular debt, and their reliance on fuel to generate electricity.

Pakistan can afford to pay india in indian rupess for all goods and services by printing them.Atleast they dont have to take the pains of smmugling in the indian rupees.In future india should seriously think about outsourcing the indian rupees printing job to pakistan.they do fairly good printing job

 

[Ray]

Money will be the key. Paid upfront.

Heard of Pak having problems to pay for its overseas debt?

 

[Singh]

It'll be a consortium probably funded by ADB and covered under international treaties. The payments I'd imagine would be in USD.

 

[Singh]

I think a few points we are missing out on; this pipeline's progress or lack of progress will be a barometer of the trust deficit between the two, desire for peace and trade, and desperation.

Ideally, an energy deficient nation like India ought not to export energy. We will be requiring huge amounts of energy in the future, and therefore we should conserve it, or utilize it for domestic needs. India should export energy, only if we have to refine it or in return we allowed to import energy from Pakistan or if we can leverage Pakistan for another source of energy (like gas from Turkmenistan, Balochistan, Iran). This makes sense in terms of energy security.

However, if India agrees to supply Pakistan oil and gas at prevailing market rates without any energy quid pro quo , it would be a very risky move.

 

[ejazr]

India actually does export petroleum products even now to various countries including Iran for example.

The main benefit for oil companies and GoI is that they don't have to sell at subsidised rates and both the oil companies and the GoI will make a good profit by selling gasoline, diesel e.t.c. at market ratest to Pakistan

Just the consequence of our lopsided petroleum pricing system unfortunately.. In any case, why arnt' we selling to Bangladesh, Nepal or Afghanistan instead? Any focus on other SAARC countries?

 

[lcatejas]

Pakistan can afford to pay india in indian rupess for all goods and services by printing them.Atleast they dont have to take the pains of smmugling in the indian rupees.In future india should seriously think about outsourcing the indian rupees printing job to pakistan.they do fairly good printing job

Ya we all know (beggars can't be choosers ) :taunt1: "katora chap"

 

[ajtr]

Ya we all know (beggars can't be choosers ) :taunt1: "katora chap"

these days beggars are always choosers when they can inflict pains to india.

 

[Singh]

India actually does export petroleum products even now to various countries including Iran for example.

The main benefit for oil companies and GoI is that they don't have to sell at subsidised rates and both the oil companies and the GoI will make a good profit by selling gasoline, diesel e.t.c. at market ratest to Pakistan

Just the consequence of our lopsided petroleum pricing system unfortunately.. In any case, why arnt' we selling to Bangladesh, Nepal or Afghanistan instead? Any focus on other SAARC countries?

Iran is exporting and importing fuel.
We are just refining fuel for Iran since they don't have enough refining capacity.
It doesn't make sense for us to support big populations like Bangladesh and Pakistan.

 

[arkem8]

these days beggars are always choosers(but they are still beggars) when they can inflict pains to india.

Big talk.... payment will be in dollars though

P.S the Paki elite(R.A.P.E.) seem to be in full retreat, the GOI hopes that they might offload some of their khandani kajana in India...
Hence the talk of visa liberalization, etc-etc. Lots of this ill begotten money might come to India instead of the Gulf or Bangladesh..

One well timed bambh blast might derail all of MMS plans...

 

[ajtr]

Oil imports: Mistrust hounds plan to import fuel from India

ISLAMABAD: Pakistan has refused to import jet fuel from India citing security reasons, The Express Tribune has learnt.
The mistrust between the neighbours still seems to prevail and Pakistan is reluctant to place its reliance on India for strategically important products. Instead, the Pakistani establishment maintains there is a need to engage Gulf countries in oil imports, sources say.
"Pakistan refused to import diesel from India in a two-day meeting which concluded on Tuesday as it has a long-term supply contract with Kuwait Petroleum Corporation (KPC)," said an official source privy to the matter.
"If Pakistan relies on India for high-speed diesel and jet fuel, there is a threat to the country's security if supplies are withheld for any reason."
The official added that India is keen on providing all the mentioned products to Pakistan and expressed its desire to lay an oil pipeline connecting the two countries.
On the other hand, a senior official from the ministry of petroleum said that Pakistan has not refused to import diesel from India. He maintained that Pakistan has expressed the desire to import furnace oil, diesel and petrol from its neighbour, adding "we have surplus jet fuel and thus we do not want to import that from India." "We want India to export diesel through Karachi and furnace oil and petrol via the Wagah border to meet the requirements of Punjab." He added that the commerce ministry has been directed to look into the required infrastructure in this regard.
According to the official, functionaries from both states will meet again in the first half of July in New Delhi to finalise the quantity as well as prices of the products.

 

[arkem8]

Oil imports: Mistrust hounds plan to import fuel from India

ISLAMABAD: Pakistan has refused to import jet fuel from India citing security reasons, The Express Tribune has learnt.
The mistrust between the neighbours still seems to prevail and Pakistan is reluctant to place its reliance on India for strategically important products. Instead, the Pakistani establishment maintains there is a need to engage Gulf countries in oil imports, sources say.
"Pakistan refused to import diesel from India in a two-day meeting which concluded on Tuesday as it has a long-term supply contract with Kuwait Petroleum Corporation (KPC)," said an official source privy to the matter.
"If Pakistan relies on India for high-speed diesel and jet fuel, there is a threat to the country's security if supplies are withheld for any reason."
The official added that India is keen on providing all the mentioned products to Pakistan and expressed its desire to lay an oil pipeline connecting the two countries.
On the other hand, a senior official from the ministry of petroleum said that Pakistan has not refused to import diesel from India. He maintained that Pakistan has expressed the desire to import furnace oil, diesel and petrol from its neighbour, adding "we have surplus jet fuel and thus we do not want to import that from India." "We want India to export diesel through Karachi and furnace oil and petrol via the Wagah border to meet the requirements of Punjab." He added that the commerce ministry has been directed to look into the required infrastructure in this regard.
According to the official, functionaries from both states will meet again in the first half of July in New Delhi to finalise the quantity as well as prices of the products.

When it comes to Indo-Pak relations dont count them chickens....

 

[Ray]

When it comes to Indo-Pak relations dont count them chickens....

Not to worry.

The chicken will come home to roost!

 

[ejazr]

Iran is exporting and importing fuel.
We are just refining fuel for Iran since they don't have enough refining capacity.
It doesn't make sense for us to support big populations like Bangladesh and Pakistan.

Well Iran exports crude oil and they do have some basic refining capacity as well that doesnt' meet all its internal requirements. India use to sell gasoline to Iran until the santions came into place (India's Reliance halts petrol exports to Iran - The National)

India has 3rd largest refining complex in the world after US and China. So Indian oil companies make profits by selling it end products like gasoline, diesel, plastics e.t.c. to other countries. Just like the US for example is a net importer of crude oil but a net exporter of petroleum products. We don't have to support other countries, but sell these products at a profit. Selling it to neighbouring countries like Nepal/BD e.t.c. means less cost spent on shipments and more profits for Indian oil companies.