ISLAMABAD: Iran has offered Pakistan 80,000 barrels per day crude oil on deferred payments as well as $250 million loan for the construction of Iran-Pakistan (IP) Gas Pipeline Project. Dr Asim Hussain, Special Assistant to Prime Minister on Petroleum and Natural Resources said this here on Tuesday while talking to reporters after attending National Assembly Standing Committee on Petroleum.
Asim said Pakistan wants Iran to extend $500 million loan to complete IP project as early as possible, adding that a high level Pakistani delegation would visit Iran to talk on this and import of crude oil. Replying to a question, he said that barter trade between Pakistan and Iran is possible. On a question, he maintained that keeping in view Pakistan's oil refining sector at present the country could import and refine 80,000 barrels of crude oil per day, which would be enhanced after upgradation of refineries' capacity, which is under process.
He said in India petroleum products are Euro-4 compliant (and therefore are more environment friendly) relative to Pakistan's less than Euro-2 compliant. He said if the local refineries did not install the hydro-crackers in next three years, their operations will be closed down. "I am also going to Iraq by the middle of March to negotiate import of oil as Baghdad has also offered crude oil to Pakistan on deferred payment," the Special Assistant to PM said.
According to industry sources, Iranian oil has more components of furnace oil. Pakistan's furnace oil requirements increased from three or four million tons in 2004-05 to nine million tons in the current financial year. Refineries in Pakistan currently have a furnace oil production capacity of just three to 3.5 million tons per year.
A senior official of the Petroleum Ministry said that during recent visit of Iranian President Mahmoud Ahmadinejad the two countries agreed to co-operate in all the sectors especially energy sector. "We have planned to construct an oil pipeline up to the Gwadar Port, where a crude oil refinery would be set up," the official added.
Iranian oil supply to the world market has declined by 20 percent following the embargo imposed by the US and EU. "Iran wants to provide oil to Pakistan that may be at a lower rate compared to oil imports from Middle East countries like Saudi Arabia, UAE and Kuwait," sources added.
Pakistan was importing 45,000 barrels of Iranian crude per day on a three-month deferred payment but oil imports were stopped after the US sanctions making it impossible for countries to use the international financial system to pay for Iranian oil.
Dr Asim also said that Qatar in principal has agreed to export 3.5 million tons LNG to Pakistan and wants a price of between $15-16 per Million British Thermal Unit (mmbtu), but Pakistan has not agreed to this price and would negotiate further in the next meeting.
He said Qatar wants to export LNG for 15 years, but the government of Pakistan is asking for 10-year supply of LNG, fearing prices may increase after 10 years. Dr Hussain said Qatar desires to provide LNG for 25 years, but later, it reduced the time span to 15 years, but Pakistan wants it for 10 years. The Qatari authorities would also conduct due diligence of companies which have extended the construction licenses of the terminals. However, Pakistan at present has one terminal to import LNG, and the import of 3.5 million tons of LNG requires more terminals.
He said the Qatari government has given the term sheet and Pakistani experts, after examining the terms and conditions, would offer prices on behalf of the Pakistani government, and this process will take three weeks to complete. Dr Asim said the companies with construction licenses for terminals will have to inform the Qatari government how much capacity they have to handle the Qatari vessels carrying the LNG.