ISLAMABAD, Jan 15: Pakistan is reported to be seeking to import oil from friendly Islamic countries on deferred payment and other facilitations to boost its reserves and partially offset the negative impact of international petroleum prices.

A delegation would be visiting Saudi Arabia, the UAE and Kuwait in a couple of days to seek uninterrupted supplies on deferred payments and reduced rates, sources told Dawn.

Early this month the country’s oil reserves plummeted to the lowest level and diesel stocks at one stage were enough only for seven days. The oil marketing companies had attributed the fall in stocks to non-payment of price differential claims by the government that exceeded $40 billion last month. The stocks, however, improved as a result of sufficient imports and closure of businesses and industries for almost 15 days in the wake of Eid holidays and mourning following the assassination of Benazir Bhutto.

The government expects the oil import bill to reach $11 billion by the end of the current fiscal year, almost 40 per cent more than last year’s $7.9 billion. It has estimated an extra burden of about Rs100 billion on the budget as a result of higher than anticipated international oil prices and for not passing on its impact to consumers.

A senior government official confirmed that consultations among the ministries of petroleum and finance, Prime Minister’s Secretariat and the Presidency had been held over the past few days for seeking oil import from the friendly countries. A source in the ministry of finance said the government was trying to revive the Special Saudi Oil Facility (SOF) under which Pakistan was provided oil initially free of cost after the 1998 nuclear tests. Later it was converted into a credit facility. The SOF in one year had stood at $960 million before being reduced to about $230 million in 2002-03 when it was discontinued.

Sources in the petroleum ministry, however, ruled out any possibility of revival of SOF, saying only the option of oil supplies on deferred payments could be possible in the given circumstances. That would mean that oil would be provided by Saudi Arabia on deferred payment of 90 or 120 days, instead of normal 30 days.

The government is making arrangements for oil imports on delayed payments only for public sector consumers, while the private sector will continue with the existing open market operation through tenders.

The Water and Power Development Authority is the largest furnace oil consumer while Pakistan State Oil controls over 60 per cent market share in petroleum products. The Abu Dhabi government is a majority shareholder in the Pak-Arab Refinery Limited (Parco) with Pakistan government. Parco is Pakistan’s largest refinery having almost half of country’s total refining capacity.

Pakistan’s total oil requirement is about 16-17 million tons a year. About 82 per cent oil requirement is met through imports and 18 per cent through domestic production. The country’s diesel consumption is around 8.5 million tons, followed by furnace oil that ranges between 4 and 6 million tons depending on the water availability and electricity needs.

Total crude requirement is about 8-9 million tons. Of this, Pakistan imports around 250,000 barrels per day from Saudi Arabia, about 150,000 from Abu Dhabi, 18,000 from Qatar and 15,000 from Iran.