The Oil and Gas Regulatory Authority (OGRA) has issued a stern warning to Oil Marketing Companies (OMCs), including the state-owned Pakistan State Oil (PSO), to ensure the timely upliftment of high-speed diesel (HSD) from local refineries. Failure to comply with this directive may result in legal consequences, as outlined by OGRA. This warning comes after several OMCs failed to lift allocated volumes of HSD during the first fortnight of August 2024, raising concerns about potential disruptions in the national oil supply chain.
In a letter addressed to several OMCs, including major players such as PSO, Attock Petroleum, Shell Pakistan Ltd, Total Parco, and others, OGRA expressed its concerns over the low uptake of HSD from refineries. Other companies mentioned in the letter include Be Energy Ltd, Kepler Petroleum, Horizon Oil Company, Hascol Petroleum, Cnergyico, Taj Gasoline, My Petroleum, Euro Oil, Al Noor Petroleum, Fossil Energy, Max Fuels, Allied Petroleum, Oilco Petroleum, OTO Pakistan, Puma Energy, Alhmmdali International Trade, Fast Oil, Petro Pakistan, Benzin Petroleum, Oil Industries, and Echo Oil.
According to OGRA, the upliftment of HSD by these companies in the first half of August fell short of the volumes allocated during the Petroleum Review (PR) meeting for August 2024. This shortfall has raised alarms within the regulatory body as it could potentially disrupt the national oil supply chain, which relies on the seamless coordination between OMCs and refineries.
OGRA emphasized that the smooth and timely lifting of petroleum products is critical to maintaining the production capacity of refineries. When OMCs fail to lift their allocated volumes, it puts undue pressure on refineries, causing a slowdown in production. This could eventually lead to supply disruptions, which would have widespread implications for the national oil supply chain.
The letter from OGRA underscored the importance of the timely upliftment of petroleum products, particularly HSD, to ensure the continuous operation of refineries. Refineries play a crucial role in the National Oil Supply Chain (NOSC) by ensuring a steady production of petroleum products to meet the country’s demand. When refineries operate at optimal capacity, they contribute to the overall stability of the NOSC. However, when OMCs fail to lift their allocated volumes, it creates a bottleneck in the supply chain, potentially leading to shortages in the market.
OGRA’s letter urged OMCs to prioritize the prompt upliftment of HSD from refineries to avoid any potential disruptions in supply. The regulatory body warned that non-compliance with its directives could result in strict action against the defaulting OMCs, in accordance with the applicable laws and rules.
OGRA made it clear that any failure to comply with its directives would not be tolerated. The regulatory authority stated that it could take stern action against OMCs that do not adhere to the guidelines set out in the letter. This could include penalties, legal action, and other measures as per the relevant laws governing the oil and gas sector in Pakistan.
The letter also emphasized that the synergy between refineries and OMCs is essential to prevent any disruptions in the supply of petroleum products. Both parties must work together to ensure that the national demand for petroleum products, particularly HSD, is met without any interruptions.
Refineries are a critical component of the NOSC, as they are responsible for converting crude oil into various petroleum products, including HSD, petrol, and jet fuel. These products are then distributed to OMCs, which supply them to consumers across the country. The efficient operation of refineries is, therefore, vital to the overall stability of the NOSC.
When OMCs do not lift their allocated volumes of petroleum products, refineries are forced to reduce their production capacity. This reduction in production can have a ripple effect throughout the supply chain, leading to shortages in the market. Such shortages can cause price fluctuations, fuel supply issues, and disruptions in various sectors of the economy that rely on petroleum products.
OGRA’s warning highlights the need for OMCs to fulfill their obligations in a timely manner to ensure that refineries can continue to operate at full capacity. The regulatory body is focused on maintaining the stability of the NOSC and preventing any potential disruptions that could negatively impact the country’s energy security.
OGRA’s intervention demonstrates its commitment to ensuring the stability of the national oil supply chain. The regulatory authority has a mandate to oversee the oil and gas sector in Pakistan, and part of that responsibility involves ensuring that all stakeholders, including OMCs and refineries, adhere to the rules and regulations governing the sector.
By issuing this warning, OGRA aims to prevent any potential disruptions in the supply of petroleum products that could arise from non-compliance by OMCs. The regulatory body is sending a clear message that it will take action against any companies that fail to meet their obligations and contribute to the smooth functioning of the NOSC.
