Impact of declining International oil prices: government import pattern changes as consumers shift to use of POL

Government of Pakistan has changed its costly oil imports pattern as a southward spiral in international crude oil prices has significantly changed the behaviour of local consumers like any other oil-importing country of the world. "Our pattern has changed" with the energy-scarce country's oil imports showing a record surge during recent months, said Aamir Butt, Secretary General of Oil Companies Advisory Committee (OCAC).
The resource-constrained Government of Pakistan imported what the OCAC official said 'highest ever' petroleum products of 320,922 MT in January. Further, the OCAC, in its last monthly products review meeting, has targeted its February imports at a historic high: at least 338,000 MT of mogas and 258,000 MT of diesel.
Officials at Pakistan State Oil (PSO), which imports more than 60 percent fuel to cater local retail demand, are also counting the number of their vessels increasing. "Overall, our imports are upward," a PSO official said adding "This month (February) we are importing five ships carrying at least 250,000MT petrol compared to routine 3-4 ships." This growth the official attributed to increasing demand for relatively cheaper petroleum products on the local market where per litter petrol is retailed at Rs 70.59 and diesel at Rs 80.91.
The continued downward trend in international crude oil prices, Butt of OCAC observed, had caused a behavioural change on the local consumer level. He recalled that at end-December last year the sells of oil marketing companies (OMCs) had contracted to almost zero. "Since the (downing) price trend was known to them, the consumers withheld their refills until January 1 and then rushed to fuel stations only to shoot the daily requirement up to 30000-35000MT from the routine 13000MT," the secretary general said.
This led to January's mogas sales up to 398,860 MT. Citing OCAC data, Irfan Saeed of InvestCap said the month under review saw OMCs fortifying their volumetric sales of high speed diesel, mogas and furnace oil by 12 percent to 1.7 million tons compared to December's 1.5 million tons. Declining prices, Butt said, had visibly shifted consumer's demand to petrol and diesel during last couple of months. Some power producers have started using diesel in their generation plants. Butt said the farmers would need increased supplies of diesel during forthcoming harvest season in March. "The demand is increasing," said the Committee official who estimated the country's current actual average running demand for petroleum products at 17,800MT.
Butt foresees February's 338,000MT import target to surge as he said the OCAC had received a green signal from the federal government to go for "stocks build-up." The country's present stocks of mogas and diesel, he said, stood at eight days and 17 days, respectively. "We are trying to ensure a 20-day sale cover available," he added. The federal government, which has hardly managed to increase the country's foreign exchange reserves beyond $15 billion, paid over $14.5 billion on account of 18.112 million tons of oil the energy-scarce country imported during FY13. The 2014 oil import bill, Butt opined, would not be much different from the preceding year's given the almost static exchange rate.