Pakistan has moved one step closer to clinching an important oil import deal with the United Arab Emirates.
The government has sent the draft Inter-Governmental Agreement (IGA) to the UAE for approval. Once done, officials from Pakistan State Oil (PSO) and Abu Dhabi National Oil Company (ADNOC) will begin negotiating a commercial agreement for the import of Mogas under government-to-government (G2G) mode, according to a report in a national daily.
Under the expected 5-8-year deal, the government aims to import 1.5 million tons of Motor Spirit from the UAE under G2G mode, which translates to 30 cargoes per year. Expectantly, the country would import two and a half to three cargoes from the UAE each month. Top officials from both sides agreed to enter into a G2G deal for the import of Mogas and jet fuel during talks last month.
Once the IGA is signed, both countries would begin discussions on the structure of the commercial agreement and finalize the specifications of gasoline and jet fuel. Currently, PSO obtains diesel from Kuwait Petroleum Company (KPC) under the G2G agreement and purchases petrol from the open market at a high premium based on international market prices.
With the new deal with ADNOC, PSO would be able to buy petrol at a negotiated price. Furthermore, PSO would import jet fuel on an as-needed basis, as the country’s refineries meet most of the country’s jet fuel needs.
Besides making progress on an imminent oil deal with the UAE, Pakistan recently convinced Russia to provide crude oil and petroleum products at discounted rates.
A Russian inter-governmental delegation is expected to visit Pakistan in January and there’s hope that the agreements for the import of crude oil, petrol, and diesel would be finalized during the visit.