Kuwait has decided to invest millions of dollars in Pakistan to build a white oil pipeline. The pipeline would be built from south to north of Pakistan to transport petroleum from Karachi port to Punjab.
An official aware of the initiative stated:
“During a recent visit to Kuwait, Pakistani officials invited the Gulf oil producer to set up an oil refinery in Balochistan and lay a white oil pipeline; its response was very positive and a high-level Kuwaiti delegation will arrive in Pakistan to discuss the two projects”
Kuwait: The Chief Supplier of Oil in Pakistan
Usually, Pakistan receives heavy supply of oil from Kuwait. At the moment, Pak-Arab Pipeline Company Limited (PAPCO) is controlling a white oil pipeline. The pipeline transports diesel which represent right around 60% of aggregate petroleum utilization in the nation.
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Shareholders of PAPCO include, Pak Arab Refinery Limited (PARCO) with majority shares of 51%, Shell having 26% shares, Pakistan State Oil (PSO) has 12% shares and Total Parco Pakistan Limited – also known as Chevron Pakistan Limited, owns 11% shares.
Tank Lorries are another source which transports oil from Karachi to the interior part of the country. But the source is afflicted with theft, reporting $200 million worth oil theft every year.
According to the official:
“The second white oil pipeline will not only protect environment, but it will also be a safe source of fuel supply”
Kuwait has already been collaborating with Pakistan to build an oil refinery in Balochistan.
Pakistan gives Green Signal to Oil Refinery in Balochistan
Kuwait Petroleum Corporation has received a green signal from Pakistan to build the refinery in the coastal region of Balochistan. The initiative for the extremely under-developed province will help diminish the import of petroleum products.
Cabinet’s Economic Coordination Committee (ECC) has also allowed importing furnace oil and jet fuel from Kuwait with the exception of competitive bidding. At the moment, PSO buys diesel on credit of 90 days from the Gulf state.
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Pakistan signed a long-term contract before the year 2000 with Kuwait’s government to import diesel. However, due to deregulation of market in 2001-02, Pakistan pushed PSO to sign a fuel supply contract with Kuwait Petroleum.
Soon after that, Pakistan and Kuwait signed a contract for the import and export of high-speed diesel. The contract was signed under the condition of guarantee payment from the government of Pakistan. It has been 15 years since the contract was signed.
Along with the existing contract, Kuwait Petroleum had shown interest in selling furnace oil and jet fuel. It has alsobeen interested in installing an oil refinery with provision of storage facility in the coastal region of Balochistan.
Right now, 23 million tons of petroleum products is being imported in Pakistan. Moreover, the demand is expected to increase to 27 million tons by 2020.
Domestic refinery supplies the 44% or 10 million tons of the total demand, while the remaining 56% (13 million tons) are imported.
Crude oil import accounts for more than two-third of the total amount used by local refineries. In the fiscal year 2015, 32% (3.9 million tons) of country’s crude oil and 68% (8.2 million tons) of imported oil was processed by the refineries.
Source: ET
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