
Refineries for prioritising local production
Listen to article
Pakistan's oil refineries have warned the regulator that over-reliance on imported fuels without properly prioritising local production will heighten risks to the energy supply chain and may cause disastrous consequences, especially at a time when the country is recovering from financial challenges.
In a joint letter written to the Oil and Gas Regulatory Authority (Ogra) chairman, the industry players said that local refineries formed the backbone of heavy industrial development and were intrinsically connected to the country's defence and energy security needs.
They also referred to Ogra's response in response to their earlier letter dated February 27, 2025 and a meeting with industry executives held on March 3, 2025 in Karachi.
"We wish to express our concerns regarding the contents of Ogra's aforementioned letter, which, unfortunately, appear to differ from the mutual understanding reached during the meeting," the refineries said in their latest communication.
During the meeting, they said, all refineries raised serious concern over the insufficient product offtake, resulting from the failure of oil marketing companies (OMCs) to procure the committed quantities of high-speed diesel and motor gasoline (petrol), as agreed in periodic meetings.
The refineries requested Ogra's intervention, which was acknowledged by the authority. "However, we believe that the explanation provided in Ogra's letter regarding the determination of insufficiency of local production before approving imports is misconceived and misleading."
As clearly stipulated under Rule 35(g) of the Pakistan Oil (Refining, Blending, Transportation, Storage and Marketing) Rules 2016, an OMC is required to give an undertaking to Ogra that it shall first lift the local product before opting for imports, the refineries said, arguing that it was the premise on which the OMCs were granted licences.
"Enforcement of such compliance rests with Ogra, which is equally empowered to take action against any defaulting OMC under Rule 69 of the Ogra Rules 2016."
Moreover, the refineries stressed that it was Ogra's responsibility to protect the public interest. Allowing imports when local production is not being lifted and at the expense of the country's foreign exchange and consumer prices (resulting from the higher inland freight equalisation margin), undermine the spirit of Ogra's statute and regulatory framework.
As already explained in the refineries' joint letter, all the refineries have contractual and commercial agreements with the OMCs for the supply of petroleum products. "With regard to Ogra's statutory responsibilities, functions and the corresponding regulatory role, we believe it is essential for Ogra to ensure that the lifting of refineries' products is prioritised before allowing OMCs any deficit imports, in line with Rule 35(g)," they said.
Additionally, Ogra must ensure that only those OMCs commence operations that hold a valid licence and have contractual or commercial arrangements with the local refineries.
"We sincerely appreciate Ogra's initiative to incorporate a "take or pay" clause into our supply agreements with OMCs to address the uplifting issues. However, as already explained, the refineries have binding contracts with OMCs and any such changes can only be incorporated if they are mutually agreed upon by all stakeholders, with a clear implementation mechanism. Ogra must also ensure the enforcement of the overall supply chain arrangement," the refineries said.
"You would agree that refineries are strategic assets of the country and their sustainability and continuity are essential for the prosperity and economic development of Pakistan."
They assured Ogra that all refineries were fully compliant with the provisions of the Ogra Ordinance 2002 as well as rules, regulations, technical standards and directives of the authority in true letter and spirit.
"In light of the above, we request Ogra's proactive role in addressing the local refineries' product uplifting issues on priority to ensure the smooth functioning of the supply chain," they added.

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Business Recorder
2 hours ago
- Business Recorder
KSE-100 rises over 800 points amid budget buzz
The Pakistan Stock Exchange opened trading on a positive note on Tuesday, as the benchmark KSE-100 Index gained over 800 points during the first trading session of the week following the Eid holidays, with investors eyeing upcoming budget measures to be unveiled later in the day. At 12:35pm, the benchmark index was hovering at 122,450.11, a gain of 809.11 points or 0.67%. Buying momentum was observed in key sectors including commercial banks, fertilizer, oil and gas exploration companies, OMCs and refinery. Index-heavy stocks, including PRL, WAFI, MARI, OGDC, POL, HBL, MCB, and MEBL, traded in the green. The federal government today would present the budget 2025–26 with an estimated size of Rs17.6 trillion in the National Assembly for debate and approval. Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb would present the federal Budget-2025-26 in the National Assembly. He would also lay the Finance Bill 2024 in the Senate on the same day, as required under Article 73 of the Constitution. During the previous week, the Pakistan Stock Exchange (PSX) stayed positive, fueled by growing optimism over a potential agreement between Pakistan and the IMF. The benchmark KSE-100 index rose by 1,950 points or 1.6% to close at 121,641 points on the last trading day of the week compared to 119,691 points at the end of the previous week. Overall, four trading sessions were held due to the Eid holiday on Friday, June 6, 2025. Internationally, stocks were buoyant and the dollar remained on guard on Tuesday as trade talks between the United States and China were set to extend to a second day, with tentative signs that tensions between the world's two largest economies could be easing. US President Donald Trump put a positive spin on the talks at Lancaster House in London, which wrapped up for the night on Monday and were set to resume at 0900 GMT on Tuesday. Stocks advanced in Asia, extending their rise from the start of the week. MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.5%, while Nasdaq futures gained 0.62%. S&P 500 futures edged 0.43% higher. EUROSTOXX 50 futures and FTSE futures both added roughly 0.1% each. This is an intra-day update


Business Recorder
3 hours ago
- Business Recorder
KSE-100 rises over 500 points amid budget buzz
The Pakistan Stock Exchange opened trading on a positive note on Tuesday, as the benchmark KSE-100 Index gained over 500 points during the first trading session of the week following the Eid holidays, with investors eyeing upcoming budget measures to be unveiled later in the day. At 11:30am, the benchmark index was hovering at 122,161.81, a gain of 520.81 points or 0.43%. Buying momentum was observed in key sectors including commercial banks, fertilizer, oil and gas exploration companies, OMCs and refinery. Index-heavy stocks, including PRL, WAFI, MARI, OGDC, POL, HBL, MCB, and MEBL, traded in the green. The federal government today would present the budget 2025–26 with an estimated size of Rs17.6 trillion in the National Assembly for debate and approval. Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb would present the federal Budget-2025-26 in the National Assembly. He would also lay the Finance Bill 2024 in the Senate on the same day, as required under Article 73 of the Constitution. During the previous week, the Pakistan Stock Exchange (PSX) stayed positive, fueled by growing optimism over a potential agreement between Pakistan and the IMF. The benchmark KSE-100 index rose by 1,950 points or 1.6% to close at 121,641 points on the last trading day of the week compared to 119,691 points at the end of the previous week. Overall, four trading sessions were held due to the Eid holiday on Friday, June 6, 2025. Internationally, stocks were buoyant and the dollar remained on guard on Tuesday as trade talks between the United States and China were set to extend to a second day, with tentative signs that tensions between the world's two largest economies could be easing. US President Donald Trump put a positive spin on the talks at Lancaster House in London, which wrapped up for the night on Monday and were set to resume at 0900 GMT on Tuesday. Stocks advanced in Asia, extending their rise from the start of the week. MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.5%, while Nasdaq futures gained 0.62%. S&P 500 futures edged 0.43% higher. EUROSTOXX 50 futures and FTSE futures both added roughly 0.1% each. This is an intra-day update


Business Recorder
9 hours ago
- Business Recorder
July-March of FY2025: Significant cut in crude oil, gas extraction recorded
ISLAMABAD: A significant decrease in domestic crude oil and natural gas extraction has been recorded during the first nine months (July-March) of the current fiscal year 2025, according to the recently released Pakistan Economic Survey 2024-25. The crude oil extraction dropped by 14.8 percent, while natural gas production declined by 6.8 percent on year to year basis. 'With no significant new discoveries, the country relied heavily on Re-gasified LNG (RLNG), imports to meet domestic demand, especially for the power and industrial sectors,' the survey stated. From July to March in current fiscal, the average natural gas consumption stood at approximately 3,143 million cubic feet per day (mmcfd). Around 798 mmcfd of this volume was RLNG, indicating a substantial portion of the supply is imported. Whereas, during the same period in fiscal year 2024, total gas consumption was slightly higher at 3,207 MMCFD, with RLNG accounting for a smaller share at 695 MMCFD. Petroleum product imports fell 6.3 percent to USD 5.0 billion (USD 5.3 billion last year), reflecting demand management. LNG imports dropped 10.3 percent to USD 2.9 billion (USD 3.3 billion last year) due to higher prices. The power sector has remained the primary consumer of RLNG during the first nine months of the current fiscal year, using of 496 mmcfd, an increase from the 433 mmcfd consumed in the same period last fiscal year. Domestic consumption of RLNG remained minimal at just 1 mmcfd. The fertilizer sector significantly increased its RLNG usage, from 43 mmcfd in the last fiscal year to 74 mmcfd in the current fiscal year To date, two LNG terminals are operational with the Ogra, licenses granted in 2016 and 2018 to EngroElengy Terminal Limited (EETL) and Pakistan GasPort Consortium Limited (PGPCL), respectively. For the development of new LNG terminals, the Ogra has granted construction licenses to three private sector companies, Energas Terminal Private Limited (ETPL), Tabeer Energy (Private) Limited (TEPL) and Global Energy Infrastructure Pakistan Limited (GEIP). Crude oil extraction has declined by 6.8 percent from 866.30 barrel in fiscal year 2024 to 807.30 barrel in first nine months of 2024-25. Crude oil imports, however, registered a slight decline. Globally, crude oil fell by 4 percent from USD 90.1 per barrel in April 2024 to USD 67.7 in April 2025. Crude oil registered an 8.8 percent increase in volume, while the value remained almost flat at USD 4.11 billion, owing to softening crude prices in the global market. Copyright Business Recorder, 2025