Page 5 - AsianOil Week 26

AsianOil SOUTH ASIA AsianOil

Pakistan hikes fuel prices

POLICY IN a move that will provide some relief to Paki- launched an investigation into allegations
stan’s oil marketing companies (OMCs), the gov- that OMCs had failed to meet the mini-
ernment signed off on an immediate increase in mum stockpile requirements as set out in
fuel prices last week. their contracts. The Oil and Gas Regulatory
The Finance Division said on June 26 that the Authority (OGRA) fined six OMCs a total of
price of gasoline would rise from PKR74.52 per PKR40mn in mid-June over failing to meet
litre to PKR100.10 ($0.60) effective immediately, this stipulation. The companies included
while diesel prices would climb from PKR80.15 Attock Petroleum, Gas and Oil Pakistan,
to PKR101.46. Hascol Petroleum, Puma Energy, Shell Paki-
While the price hike reflected a rally in inter- stan and Total Parco Pakistan.
national oil prices, with Brent now trading in a However, fuel imports could ramp up soon
$40-45 per barrel range, it was attacked by oppo- as the industry responds to rising demand
sition party Pakistan Muslim League-Nawaz and better pricing. S&P Global Platts quoted
(PML-N) as unnecessary and irresponsible. unnamed traders on June 30 as saying OMCs
Senior PML-N leader Shahid Khaqan Abbasi were expected to increase their imports owing
questioned why the government had upped gas- to a slower recovery in refinery runs.
oline prices by around PKR25 when OMCs had One Singapore-based trader pointed to
petitioned for a PKR15 jump. He argued that the PSO’s move to amend recent gasoline buy
government was using the increase to cover a tenders, bringing forward delivery dates. “By
shortfall in tax receipts – a PKR30 per litre levy pushing the dates earlier, we can see that PSO
on gasoline and diesel sales remains in place. has a more urgent need for [gasoline] cargoes,”
The price increase will be welcomed by the the trader said.
country’s OMCs, however, which have found Pakistan’s fuel inventories have been strained
themselves at odds with the government over following a recovery in demand since early May’s
pricing in recent weeks. easing of lockdown restrictions that has not been
Anonymous industry sources have been matched by refinery operating rates.
complaining to the local media since May that The Express Tribune reported in May that
low prices meant they would be importing fuel refiners had warned the government that
at a loss. They warned that while this might be between mounting inventory losses and cheaper
acceptable to state-owned Pakistan State Oil imports by PSO, fuel production was likely to
(PSO), the situation would likely lead to short- suffer.
ages until pricing improved. The government “Refineries typically have at least a month lag
sets prices based on state-owned Pakistan State when reacting to an increase in demand, so nat-
Oil’s (PSO) oil imports. urally when demand picks up so quickly so fast,
When the country began experiencing you would see inventories come down,” Platts
fuel shortages last month, the government quoted another source as saying.™

SOUTHEAST ASIA

Jadestone acquires Lemang

PSC onshore Indonesia

FINANCE & SINGAPORE-BASED independent Jadestone the ability to re-use existing wells and infrastruc-
INVESTMENT Energy has agreed to pay up to $44mn for Man- ture as well as the fact the field is only 17 km from
dala Energy Lemang’s 90% operated stake in the the nearest gas export pipelines.
Lemang production-sharing contract (PSC) The PSC, which is located in Sumatra,
onshore Indonesia. includes the Akatara gas field, where 11 wells
Jadestone said on June 29 that it had agreed to have already been drilled. The field produced
pay an initial $12mn for the stake, with another oil for three years until December 2019, when
$31.7mn based on certain upside contingencies. it became economically unviable to continue
For example, $5mn is due upon delivery of first doing so.
gas, with another $3mn due if first production is Jadestone said the field had approximately
achieved before March 31, 2023. 115bn cubic feet (3.26bn cubic metres) of best
Jadestone said the deal was attractive because estimate gross undeveloped wet gas in place.
of the PSC’s low cost of development, owing to The company said this equated to unrisked 2C

Week 26 02•July•2020 www. NEWSBASE .com P5