Pakistan is seeking 50,000 tons of crude oil per day on deferred payment from Iran to overcome oil shortage and secure the rapidly depleting foreign exchange reserves, sources in the Petroleum Ministry told Business Recorder on Monday. This is in addition to a similar request by Pakistan to Iran with respect to furnace oil.
Pakistan is currently importing 16,000 tons per day crude oil from Iran to meet its requirement. Sources said that Pakistan has written a letter to Iran seeking crude oil on deferred payment and if the Iranians agree then the two sides are likely to hold further discussions on the modalities of the deal.
Sources said the government has also held discussions with oil refineries here in Pakistan and they are also ready to take Iranian crude. Sources said that Iran has formally agreed to provide both furnace and crude oil on deferred payment. Iran can provide oil on deferred payment to Pakistan for three months without parliamentary approval; however any period greater than three months would require parliamentary approval.
Oil refineries in Pakistan are currently operating at 60 percent of their total capacity due to shortage of crude oil. Sources said that due to poor rating of the country, foreign banks had refused to open the Letter of Credit for crude oil imports to Pakistan; however after International Monetary Fund (IMF) agreement to provide assistance to Pakistan, banks have opened LC for crude oil import.
These banks are also charging 3 to 4 percent service charges for opening LC for crude oil import. Pakistan imports crude oil from Saudi Arabia, UAE, and Qatar on credit facility of 30 days whereas Kuwait had given extension in credit oil facility from 30 to 60 days.
The extension in credit oil facility from Kuwait would end in December. Pakistan had sought an extension in credit oil facility from these countries through diplomatic channels but had failed to get an extension. Sources said that due to reluctance of opening of LC for crude oil import by foreign banks, the import of crude has been delayed.
Sources maintained that the country had crude stocks sufficient enough for 10 days and Pakistan had received some shipment of crude. They said that Pakistan received one ship of crude oil on Friday and the second ship will arrive on Saturday at Karachi port. Pakistan would be getting another ship of crude oil on November 27 that would help boost oil reserves in the country.