Pakistan sends draft oil import deal to UAE

ISLAMABAD: Pakistan has sent the draft intergovernmental agreement (IGA) to the UAE for formal assent from the relevant authorities in Abu Dhabi. Once approved, officials from Pakistan National Oil Company (PSO) and Abu Dhabi National Oil Company (ADNOC) will start negotiating a commercial agreement to import Mogas under the GtG model.

A senior Energy Department official confirmed the development to the news. “We have sent the draft IGA to the UAE for approval. Once signed, commercial negotiations will begin between the state entities of the two countries.”

The government wants to import 1.5 million tonnes of Motor Spirit from the UAE per year under the GtG model, which means 30 shipments a year based on expected 5-8 year deals.

This means that the country will import two and a half to three shipments from the UAE every month. During the Abu Dhabi talks in the first week of November 2022, senior officials from both sides agreed to a GtG agreement on the import of Mogas and jet fuel.

“This will help Pakistan to have a sustainable supply of petroleum products in the country. More importantly, the GtG agreement will also provide monetary comfort in terms of premiums for imported gasoline and other products,” the official added, adding that they hope PSO and ADNOC will The commercial agreement between the two countries can be finalized as soon as possible after the signing of the IGA. Pakistan wants to ensure gasoline imports under GtG mode from January 15, 2023.

After the signing of the IGA, the two sides will start negotiations on the structure of the commercial agreement and finalize the specifications of gasoline and jet fuel, the official explained. PSO obtains diesel from KPC (Kuwait Petroleum Company) under the GtG agreement, and purchases gasoline from the open market at a high premium based on the product price in the international market.

Now under the GtG agreement, PSO will get gasoline from ADNOC at negotiated prices. In addition, PSO will also import jet fuel as needed, as the country’s refineries meet jet fuel demand most of the time.