Pak’s offer of conditional talks could have been prompted by its current oil reserves which have touched a new low.
Pakistan’s offer of conditional talks and its statement that it will not be the first to launch a war against India may have been prompted by not only the precarious state of its economy but also its current oil reserves which have touched a new low. Healthy oil reserves are necessary to fight a war, but Pakistan’s energy sector is facing demand-supply imbalance owing to a host of factors, according to people aware of the matter. They said political mismanagement, crisis in the Gulf, weak currency at home and inadequate foreign exchange reserves have contributed to Pakistan’s woes.
Pakistan’s energy sector is grappling with supply and stocks below the planned level, and the country’s oil companies have suffered heavy financial losses because of insufficient foreign exchange available in the country, said one of the persons, who spoke on condition of anonymity.
The total stock of petroleum products stood at 26 days at the end of July, amounting to just 35% of the total storage capacity of 74 days.
Similarly, crude oil stock in Pakistan’s refineries stood at about 398,000 metric tonnes (MT) at August-end, as against a total capacity of around 807,000 MT, reflecting only 49% utilisation of refinery capacity. The usable stock of crude oil stood at around 256,000 MT, or nine days’ supply, ET has learnt. The situation has worsened because Pakistan’s oil marketing companies were slow in importing crude oil, said a second person.
He said the volatile global oil prices and depreciating domestic currency impacted functioning of the oil marketing companies. The increase in tax on these companies to 0.75% from 0.5% also hurt them, he said.
Pakistan’s ministries of maritime affairs and petroleum have advised the Prime Minister’s Office that 25 days of supply should be kept owing to tensions in the Gulf. However, with the Imran Khan government has not paid any attention to falling oil reserves and maintaining minimum oil supply, the people said.