Pakistan shares oil import agreement with UAE authorities

• Once agreement is signed commercial talks would begin between PSO and UAE's ADNOC.
• Pakistan is seeking to import 1.5 million tonnes of motor spirit per year.
• Agreement was forwarded as a follow up to talks held in Abu Dhabi in November.

ISLAMABAD: Pakistan has sent a draft of an inter-governmental agreement (IGA) to UAE for the import of mogas under a government-to-government mode between Pakistan State Oil (PSO) and Abu Dhabi National Oil Company (ADNOC), reported The News on Thursday.

“We have sent the IGA draft to the UAE for approval. Once it is signed, commercial talks would begin between the state entities of both the countries,” a senior official of the Energy Ministry confirmed to the publication.

As per the agreement Pakistan is seeking to import 1.5 million tonnes of motor spirit per annum, which is equivalent to 30 cargoes in a year, in the deal which is expected to last for 5-8 years.

A monthly breakdown would mean that Pakistan would import two and a half to three cargoes a month from the Gulf state.

The agreement was forwarded as a follow-up to the talks held in Abu Dhabi during the first week of November 2022. In the talks, both sides had agreed to enter into a GtG deal for the import of mogas and jet fuel.

“This would help Pakistan have sustainable availability of petroleum products in the country. More importantly, the GtG deal would also provide a monetary solace in terms of premiums in importing petrol and other products,” said the official adding they were hoping that the commercial agreement between PSO and ADNOC would be finalised soon after the IGA was inked. 

Pakistan is hoping to begin the import of petrol from January 15, 2023, under the deal.

The official explained that after the agreement is inked, both sides would initiate talks on the structure of the commercial agreement and finalise the specifications of petrol, and jet fuel.

Currently, PSO gets diesel from Kuwait Petroleum Company under a similar agreement and purchases petrol from the open market with high premiums depending upon the prices of products in the international market.

But this deal will allow PSO to get petrol from ADNOC at a negotiated price. In addition, PSO would also import jet fuel on a need basis as the country’s refineries cater to jet fuel needs most of the time.