Oil pipeline to Wagah on the cards: Report

Written by Press Trust of India | Islamabad | Updated: May 30 2012, 06:47am hrs
India has offered to build a pipeline to the Wagah land border and supply 50 million tonne of POL products a year to meet Pakistans requirement, according to media reports on Tuesday.

The offer was made during talks on Monday between a visiting Indian delegation led by P Kalyanasundaram, Director (international cooperation) in the Petroleum Ministry, and a Pakistani team headed by joint secretary Shabbir Ahmed of the petroleum ministry.

The Indian team also met petroleum minister Asim Hussain, who said Pakistan is interested in importing furnace oil and diesel.

India offered to build a pipeline to the Wagah border to export oil to meet all of Pakistans needs if New Delhi is assured of purchases in large quantities over the long run, The Express Tribune quoted its sources as saying.

Officials said Pakistan can get oil supplies from India at prices that are 30% cheaper because of low transportation costs.

The News daily reported that India had come up with a "surprise offer" to cater to all of Pakistans petroleum needs by exporting 50 million tonnes of POL products per annum. It also offered to provide POL products at prices lower than that paid by Pakistan for imports from the Gulf.

An unnamed Pakistani official told The Express Tribune that the two countries were expected to sign a memorandum of understanding relating to import of oil and liquefied natural gas (LNG) from India. India has told us that it has a surplus capacity of 50 million tonnes of oil, he said.

During the first day of technical-level talks in Islamabad on Monday, the Pakistani team expressed desire to import all petroleum products, including high-speed diesel, furnace oil, petrol and jet fuel.

At the same time, Pakistan offered to export naphtha a surplus product to India so that it could be converted into petrol and re-exported to Pakistan. India also needs naphtha for its industries, an official told The Express Tribune. The two sides are expected to finalise prices of petroleum products and transportation charges, another official said.

Besides laying an oil pipeline to the Wagah border, the two sides discussed the possibility of oil being shipped by sea to meet the demand in southern Pakistan. Though import of oil by ship was considered cheaper, the pipeline was described as the cheapest option.

The two sides are also expected to discuss the import of 200 million cubic feet of liquefied natural gas a day from India.

Pakistani authorities believe the import of LNG from Qatar and other countries like Malaysia would take three years, while India might start supplies in six to eight months, an official said.

India has the capacity to refine 250 million tonnes of petroleum products while Pakistans refining capacity currently stands at 20 million tonnes a year.

Pakistan consumes 6.9 mt of diesel a year, of which domestic oil refineries produce 3.2 to 3.4 mt with the rest being imported.

Pakistans furnace oil demand is about nine million tonnes, of which domestic refineries produce about 2.5 mt. Pakistan is working on new power plants that will increase demand for furnace oil in coming years.