The petroleum ministry has held the Oil and Gas Regulatory Authority (Ogra) responsible for the recent fuel crisis in the country.

In a report submitted to the petroleum minister, the office of director-general for oil said that Ogra failed to perform its duty as a regulator as it did not take timely action to head off a crisis. Ogra’s ineffectiveness resulted in black marketing of petrol and diesel in many parts of the country.

Sources in the ministry said Ogra was supposed to take steps to ensure availability of petrol across the country not only by taking measures against hoarders and black marketers but also through timely imports to meet the shortage created by the shutdown of Parco due to floods.

“The Ogra teams did nothing other than to send show-cause notices to oil marketing companies (OMCs) during the crisis and to wait for the replies to such notices,” an official said.

Petroleum Minister Syed Naveed Qamar is expected to forward the report to the Prime Minister’s Secretariat because Ogra falls under the administrative control of cabinet division.

The report added that the petroleum ministry dispatched teams to various places to examine the availability of petrol at the designated retail outlets.

Meanwhile, the recent fuel crisis has served to sharpen the differences between the ministry and the regulator.

A ministry official alleged that senior officials of Ogra drew heavy salaries (up to Rs400,000 per month) but they hardly did anything for the benefit of the industry or the consumer.

“The situation was better when the OCAC was directly monitoring the supply situation in the country,” he claimed.

Officials of Ogra declined to comment over the report or the supply position in the country.

From Dawn News

The case of unsolved circular debts will lead to major oil crises says Parco and PSO. This is a long pending issue and government should now step up to play its role in resolving before it becomes the reason of further loss to the economy. The business recorder news item gives the details.

The country’s oil sector’s largest giants, Pak Arab Refinery Limited (Parco) and Pakistan State Oil (PSO), have warned the government of an imminent massive oil crisis due to the unresolved circular debt problem and have urged it to arrange funds for import of petroleum products, Business Recorder has learnt reliably.

Parco has urged the government to arrange funds via PSO to save it from default on account of Letter of Credits (L/Cs) for the import of crude oil. Parco revealed that its bank borrowing was rising due to non-payment of dues by PSO with Rs 145.4 billion receivables against different clients on Thursday morning.

“We are not in a position to open L/Cs to import crude oil due to non payment of dues by PSO,” Parco management said adding that its revenue has also drastically declined due to refinery’s closure caused by floods. The cash-strapped PSO has also informed the government that the strain on its cash flows for consistently carrying such receivables has limited its ability to guarantee the supply of the products to customers. “We have already defaulted on our obligations to the local refineries which require advance payment for the supply of products which is further aggravating the company’s liquidity crunch,” PSO management says.

“Due to floods in the country, our daily collection of funds has also reduced, worsening our cash flow problems and Pakistan Electric Power Company (Pepco) is not making payments from its own bill collection,” PSO authorities said. Government is doing its best to clear outstanding circular debt, PSO management said, “however, we need immediate help to meet our LC payment commitments for imports and non clearance of dues by power sector and other clients will disrupt the entire supply chain of petroleum products.”

PSO receivables against different clients as follows: WAPDA at Rs 47.3 billion, Hubco at Rs 58.4 billion, Kapco at Rs 27.69 billion, PIA at Rs 515 million, OGDC at Rs 328 million, KESC at Rs 1.55 billion, financial charges from PIA at Rs 960 million, price differential claims (PDC) on High Speed Diesel (HSD) at Rs 1.38 billion and PDC on imported PMG at Rs 3.375 billion.

PSO owes Rs 116.97 billion dues to local as well as international fuel suppliers as follows: Rs 37.108 billion to Parco, Rs 13.723 billion to PRL, Rs 9.36 billion to NRL, Rs 24.525 billion to ARL, Rs 4.69 billion to Bosicor and Rs 26.89 billion on account of L/Cs payments and other international fuel suppliers.

Crosspost from TelecomPK

Of the various uses of mobile technology, one interesting use of the technology for Gas or Oil Pipeline Operators is for Remote Cathodic Protection (CP) Monitoring.

The traditional way used to monitor CP is the manual measurement of potential risks by a dedicated team of field engineers and technicians. This required an operator to physically go out to the field and collect readings on a quarterly basis. Records showed that, a pipeline of 128 miles could take up-to three weeks to complete. Not to forget the labor, time and cost involved in this effort.

Now, using the GSM technology  a complete M2M turn-key solution can be provided for web-based wireless remote monitoring systems for the oil, gas, irrigation, water/wastewater, and similar industries. The technology gives a reliable solution for data acquisition with low-cost telemetry, well-packaged hardware and easy-to-grasp web-based data presentation.

The flow diagram below shows how it really works.

This is one way mobile technology is used in the oil and gas industry. I believe more of such viable solutions can be made to help the agricultural sector.

The state oil company, PSO already in litigation along with Petrosin over the auto-gas deal, it has now being disclosed by the company MD that a power group is involved in supply scams involving selling of cheap oil ahead of monthly price adjustments.

Here is an excerpt that appeared in Dawn News today.

A fresh scam in the oil supply chain surfaced on Thursday when the management of state-run Pakistan State Oil (PSO) officially confirmed that a powerful group in the company was involved in selling cheap oil to influential dealers ahead of monthly price adjustments to enable them to charge higher rates from consumers.

As the managing director of the country’s largest oil supplier, Mr Irfan Qureshi, broke the news before the National Assembly’s Standing Committee on Petroleum and Natural Resources, the committee’s chairman, Shaikh Waqas Akram, demanded an inquiry and its report within a week to identify officials involved in manipulating the supply chain to the benefit of dealers.

Mr Qureshi told the committee that PSO officials were found providing petroleum products to dealers on credit at the end of each month in anticipation of an increase in prices to earn a windfall at the cost of PSO. He said two officials had been held accountable for being involved in the malpractices and an inquiry had been in progress since April.

He said the practice had been going on for years and had now been brought to an end. He said six officials at the Lalpir depot had been suspended for embezzling Rs100 million. He said whenever the PSO took action against corrupt officials, courts reinstated them.

Read more: http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/the-newspaper/front-page/powerful-group-in-pso-involved-in-supply-scams-370

The government is likely to increase oil prices by Rs 3-4 per litre on the back of hike in global oil prices from April 1, 2010. Sources said that at present, the average oil price in gulf market ranged between 77 to 78 dollars per barrel that accounted for Rs3 to Rs 3.15 per litre increase in oil prices in Pakistan. The government had increased petroleum products’ prices on February 1, 2010, with a substantial hike of Rs6.10 per litre in petrol price. But on March 1, it announced a nominal cut in oil prices ranging from Re0.64 to Rs2.56 per litre.

Pakistan State Oil (PSO) faces serious debt issues and the finance ministry has said that it cannot help. The National Assembly standing committee on petroleum and natural resources has resolved to take up the issue before Prime Minister Yousuf Raza Gilani. Business Recorder reports that:

Cash-strapped PSO had requested for immediate arrangement of Rs 60 billion to ease its financial woes in a meeting held on Wednesday. Special Secretary, Finance, Asif Bajwa, chaired the meeting which was attended by all stakeholders.

“But Finance Ministry has agreed to release Rs 5 billion to Pakistan Electric Power Company (Pepco), which will make payment onward to PSO,” sources said. “Now the third quarter is going to end, and the Finance Ministry will release money during the next month to bail out oil and power sectors,” sources said, and alleged that poor recoveries by Pepco were also the main reason of the circular debt. During the meeting, it was stated that Pepco had sent bills to the consumers and would make payment to PSO during next month.

Meanwhile, briefing the NA body on petroleum and natural resources, PSO Managing Director (MD) Irfan Qureshi said that PSO dues against its clients had exceeded Rs 105 billion. He said that PSO required Rs 57 billion to mature Letters of Credit (L/Cs) for oil import. “PSO may default its L/Cs by April 20 if it is not provided Rs 57 billion,” he warned.

The Oil and Gas Development Company Limited (OGDC) authorities informed the NA body on petroleum and natural resources that litigation issues were resulting in loss of oil and gas. “The country is losing 6000 barrels per day crude oil, 300 MMCFD natural gas and 500 tons LPG per day due to litigation,” OGDC officials said.

Sui Southern Gas Company Limited (SSGC) representative said that the company was to receive Rs 35 billion from its clients on account of gas supply and refunds from FBR. The outstanding of SSGC against KESC stands at Rs 17 billion and Rs 4 billion from Water and Power Development Authority (Wapda). The gas utility is to receive Rs 10 billion on account of refund from Federal Board of Revenue (FBR).

Pakistan State Oil (PSO), the country’s leading oil marketing company, has posted Rs 5.083 billion as profit after tax in the half year period ended December 31, 2009 as compared to after tax loss of Rs 10.049 billion recorded in the corresponding period in 2008.

Highlights

• Overall, the market share for PSO stood at 71.4 percent during the first half of FY10.
• Despite financial challenges and economic slow down, PSO maintained its leadership in the White and Black Oil market segments with market shares of 56.3 percent and 88.5 percent respectively.
• The reporting period witnessed the transference of 12 percent of the government of Pakistan’s shareholding to the employees of PSO.
• During the first half of FY10, the company signed a Fuel Supply Agreement with Northern Power Generation Company Limited (NPGCL), a subsidiary company of the Pakistan Electric Power Company (Private) Limited (PEPCO), for exclusively fulfilling Furnace Oil and HSD requirements of all the power stations of NPGCL.

Via Pakistan Times

Amid typical pretext that over the past few months Pakistan did not pass on the oil price-hike to the populous – despite burden of almost over Rs.125 billion – a drastic increase in the price-index of petroleum products has eventually hit the masses, the ultimate impact of anguish and agony shall fall on those who fall in the category of ‘have-nots’.

As a matter of fact, the increase of 5 to 9 per cent in POL prices has come as a big shock, which will have hefty negative impact on the inflation stricken masses and the fragile economy.

As we understand, industrialists, exporters and traders are of the opinion that there was no valid justification to increase the petroleum prices as international prices are still below $ 80 per barrel and the decision would be detrimental to local industry, especially to the exporters.

Many prominent economists say that this action is expected to increase inflation. The unprecedented increase in the prices of petroleum products has already put the industry at a disadvantage where consumers matter.

It would create a bigger financial crunch, increase economic difficulties, be it the business community, agriculture sector or the general public. Public transport vehicle owners and business community, besides the people from various walks of life, have already started protesting against the hike.

Prices of consumer items, electricity tariff and transport fares would go up substantially due to this increase. Industrialists are already facing plentiful problems because of electricity and gas shortage coupled with high mark-up and it would be difficult for the industry to absorb the new shock.

The increase in diesel will also bring financial miseries to the agricultural community. The country is facing irrigation water shortage and it is supplemented by tube-wells, which are mainly operated through diesel.

Going by analytical realism, it seems that there is no realization on the part of the policy makers that higher oil prices get translated into higher commodity prices. Surge in petroleum products prices will not only increase the Sensitive Price Index (SPI), it would also bring more people below the poverty line and directly impact the pace of industrial and commercial activities.

We honest think that instead of generating revenue through the easy source of increasing POL prices, the government should devise a strategy to bring down the non-development expenditure, avoid wasteful expenses, widen the tax net and plug the leakages.

True that once upon a time, the national exchequer had to bear – what is termed as subsidy – through support from borrowing and reducing the development expenses – yet the newest decision of increase in oil and its related products is bound to add still more fiscal problems and miseries for the populous –specifically the poor.

Paradoxically, instead of healing the wounds, inflicted on hearts and soul of the people, the government has once again raised the price of POL products by Rs 6.10 – taking petrol price to Rs71.21 from Rs65.11 per litre.

Likewise, the price of High Speed Diesel has been raised to Rs71.89, Light Diesel oil to Rs61.07, HOBC to Rs86.84 and Kerosene oil to Rs64.60 per litre.

This alarming rise would surely have crippling impact on the national economy, which is already in depression. The increase would lead to a snowballing effect in prices of multiple items, pushing up the overall inflation and making it all the more harder for the common man to meet both ends.

It is a recognized fact that any addition in fuel prices sets inflationary spiral into motion, which is a perilous phenomenon. High-energy prices have already sapped consumer and business spending and depressed economic growth. The latest hike would cause more inflationary pressure, increase transportation cost, create more difficulties for common man and destroy the entire industry.

There is no denying the fact that the price of oil in the international market did go up by hovering around $ 80 a barrel yet the increase of above Rs6 per litre has no justification as the government made a similar increase in POL prices on 1st September, 2009 when the prices were about $ 70 a barrel.

As international economy is recovering from recession, demand and price of oil would go up and hence additional burden on industry, consumers as well as on balance of payment as our products would be less competitive in the international market because of fluctuating energy prices.

Hence the future of energy availability at affordable cost has become an issue which needs to be deliberated and addressed predominantly by the developing countries including Pakistan – if at all they wish to maintain their economic growth with zeal and zest to improve the standard of living of their people.

The main reason was that the previous government was not willing to earn a bad name – as the inflation was at an all time high – resultantly the common man was suffering due to higher prices of food items.

Later when the elections in Pakistan were over and the economy – obviously was no more able to absorb the crunch of subsidy – the government took several difficult and taxing decisions.

Amid the then scenario – the present set-up raised the prices of oil and electricity. Eventually, another cycle of inflation hit the masses and the industry – as transportation and production costs would go up.

By all means – the foremost question is as to what should be done to overcome the alarming crisis? And pragmatically the only answer – which surfaces is – the optimal exploration of indigenous oil and gas resources on war footing with
initiation of instant exploitation of alternative energy resources.

Of-course, endeavors like exploration is an expensive high risk venture and that too – despite advent of exceptionally advanced and sophisticated equipment.

To keep the economy afloat and inflation under control, concerted efforts need to be made to reduce dependence on imported oil by developing domestic sources of energy supply. These include not only hydro and coal but also wind and solar.

Pakistan could take benefit from the experiments of other countries to develop renewable sources of energy and efficient use of oil.

We would therefore suggest that Pakistan should get involved the private sector interested in investing in these programmes by offering tax relief and redouble oil and gas exploration efforts to meet its growing energy needs.

Thus, it would be a most appropriate and tangible step – if the local and foreign oil exploration companies are given maximum incentives with tax holiday atop for a realistic period pf time along with safe, sound and secure environment for exploration in all vicinities of the country.

At the same time, we ought to gear up the exploitation and use of coal reserves along with solar and wind energy to reduce dependence on imported oil and instead we should meet our energy needs indigenously.

We think – this would be a most befitting measure to save the people from still more financial burdens as well as to make Pakistan self-reliant in all arenas – explicitly in this significant field – the Oil – with sincere determination to attain more zeniths of affluence – based on peace, progress and prosperity – for all times to come.

And, finally we would suggest to the government to withdraw the new increase in the prices of petrol and petroleum products – at-once. We say so because such a hefty increase is not less than yet another toxic shot to the poor masses – who in no way are able to confront any more brunt – in any mode or manner.

The Oil & Gas Pakistan Forum 2010 with special emphasis on “Solutions for Sustainability – Pursuit for Steadier Markets” concluded in Islamabad today with speakers providing perceptive insight. Experts stressed on the need to capitalize on the enhanced stability in the global Oil & Gas business, pledging a realignment of policies for a robust future and a collective strategy to recover from the setbacks of the previous years and the need for technology as a driver for future oil and gas initiatives.

More than 300 delegates from government, regulatory bodies, prominent oil & gas companies, stakeholders, members of the Diplomatic Corps and media attended the day-long conference supported by the Petroleum Ministry, MOL Pakistan, Eastern Testing Services and other partners.

The Federal Minister for Petroleum and Natural Resources, Syed Naveed Qamar delivered the Keynote Address, in which he highlighted the most attractive features of the liberal Petroleum Policy and urged the local and foreign E&P companies to proactively enhance their activities and investments in Pakistan for higher productivity. He assured the forum of his complete support and the government’s resolve to protect their interests. Mr. Mehmood Saleem Mehmood, Secretary Petroleum was also present.

Mr. Janos Feher, Chairman, Pakistan Petroleum Exploration & Production Companies Association (PPEPCA) stressed the need for a collection strategy to achieve sustainability and build a steadier, safer and productive market for the oil and gas sector in Pakistan.

Mr. Menin Rodrigues, Chairman of the Conference & CEO of SHAMROCK Communications (Pvt.) Limited in his opening remarks appreciated the efforts of the sector specialists and emphasized the emerging opportunities and challenges in this evident phase of stabilization in this industry across the globe.

Well researched Papers were presented in the various sessions to discuss critical topics including; Regulatory Framework, Incentives, Opportunities, E & P Infrastructure, Business models, Geopolitical Issues; Depleting Reserves, Alternate Energy and Impact of Prices on Economies and an outlook of global perspective. The sessions were chaired by distinguished personalities like; Mr. Saquib Mohiuddin, CEO, Business Support Fund, Ministry of Finance; Mr. Tauqir Sadiq, Chairman-OGRA and Mr. Rune Stroem, Country Director-Asian Development Bank.

The eminent speakers included Janos Feher, Chairman, Pakistan Petroleum Exploration & Production Companies Association (PPEPCA), Dr. Shahab Alam, Director-Petroleum Ministry; Tashfeen Qayyum, CEO, Eastern Testing; Shahrukh Kiyani, Manager Projects, Mari Gas Company Ltd., Sohail Kiani, President-SARF Canada, N.A. Zuberi, Executive Director, Private Power Board; Abbas Bilgrami, Managing Director, Progas and Samir Ahmed, Managing Director, National Commodities Exchange Limited (NCEL).

Mr. Rune Stroem, Country Director Asian Development Bank, gave an indepth overview of the global and regional oil and gas sector opportunities against the backdrop of economic conditions in the respective areas. He said, “Pakistan’s energy issue was a financial issue”. Concluding the conference Dr. Gulfaraz Ahmed, Former Secretary Petroleum eloquently stressed a restructuring of the energy infrastructure with the involvement of professional talent and to harness the country’s vast reserves of natural gas. The conference ended with a vote of thanks and appreciation to the organizers for a well-managed conference

India’s state-run oil and gas companies plan to raise their total investment by about a fifth in the next financial year to raise crude output, expand refineries and produce cleaner fuels, a senior government official said Friday.

The companies are likely to end the current fiscal year through March with a total investment of 580.95 billion rupees and plan to spend 694.58 billion rupees ($15 billion) next year, the official, who didn’t wish to be identified, told Dow Jones Newswires.

Indian energy companies are increasing investment to meet rising demand for fuels in the world’s second-fastest growing major economy. India’s top policy think tank, the Planning Commission, has forecast the economy to grow at 9% between April 2007 and March 2012.

The federal government aims to raise spending in the sector to assure energy security through higher local output and investment in oil equity abroad. The South Asian nation currently imports more than three-fourths of its crude oil needs.

Oil & Natural Gas Corp., India’s largest explorer, is likely to raise capital expenditure next year by about 7% to 265.23 billion rupees as it speeds up drilling at exploratory blocks, including the Cauvery and western offshore basins, the official said.

ONGC–which contributed about three quarters of India’s crude oil output and two-thirds of natural gas production in the last fiscal year–hasn’t kept up with output targets as its fields are ageing and it hasn’t brought any new blocks into production for many years.