KARACHI: In an unprecedented move, Pakistan has canceled import of gasoline, diesel and crude oil from next month to support domestic refining industry as energy demand sharply declines amid countrywide lockdown, announced the Ministry of Energy (MoE) on Thursday. 

The decision to halt import of petroleum products follows country’s economic meltdown resulting from coronavirus pandemic. 
In a letter to the Oil Companies Advisory Council (OCAC), the ministry said that the consumption of motor gasoline had dropped significantly due to lockdown by provincial governments to control the spread of COVID-19.

“As the OMC (Oil Marketing Companies) have sufficient inventory of the product therefore all OMCs are requested to cancel their planned imports (April 2020 onwards) and increase their off-take from refineries so that operations of refineries are maintained at an adequate level,” the letter by the energy ministry states.

The ministry further said that domestic refining industry had sufficient stockpile of petroleum products to meet Pakistan’s fuel demand, and continued an uninterrupted supply to meet the nation’s energy needs in the wake of recent crisis resulting from COVID-19 outbreak.

Pakistan imports 70 percent of its crude oil from Saudi Arabia while the remaining comes from UAE, said Dr. Nazar Abbas Zaidi, former secretary of the OCAC. “The finished products are also imported from Middle Eastern countries mainly Kuwait and UAE,” he told Arab News. 

To ensure smooth supply of petroleum products amidst current lockdown, the energy ministry has issued special directives to facilitate free movement of employees, vendors and contractors of national refineries so as to ensure uninterrupted supply to petrol pumps across the country. 

Analysts say the country meets 85 percent of its energy requirements through imports. “We don’t have enough capacity to store cheaper oil to build future reserves,” said Samiullah Tariq, an economic expert, adding that never before has Pakistan taken such a step in history. 

However, petroleum sector experts suggest that the depleted reservoirs located in Sindh and Baluchistan provinces could be utilized to store crude oil.

“Building oil reserves is also important for the energy security of the country”, Masood Abdali, a Texas based energy expert and former business development manager of Weatherford, Saudi Arabia and Bahrain, said. “This would also create employment opportunities in local oil and gas exploration sector”, he added.

Last fiscal year Pakistan imported energy products worth $14.4 billion while the south Asian nation has spent $8.23 billion on imports petroleum products during JULY- FEBRUARY, 2019–2020 period of current fiscal year, according to the Federal Bureau Statistics.

The global oil market remains under pressure due to subdued demand. Brent crude on Thursday declined by more than 4 percent to $28.74 per barrel while WTI was down 7.27 percent to $28.77 per barrel.