OPINION: How improving the oil supply chain can save Pakistan millions of dollars

For over three decades, FOTCO has operated Pakistan’s primary oil jetty (and the only one in Port Qasim) and has handled over 3700 vessels since 1995 without a single instance of serious safety incident. While handling more than 150 vessels annually, FOTCO’s performance record surpasses that of any comparable oil terminal in the country. Handling over 70% of all imported white oil (Diesel and Motor Gasoline), the strategic importance of this oil jetty is evident.

As with some other international terminals, vessels berthing at FOTCO are given 48hrs for discharging or loading. At this rate, the jetty can theoretically berth an average of 15 vessels every month. Yet operational data for FY 2024-25 reveals a stark inefficiency: over 40% of vessels exceeded the 48hrs laycan (Laydays cancelling). This is not a marginal variance and begs the question as to what is the reason behind this systemic issue and how does this affect the oil supply chain?

If we speak of the impact first – delays in ship berthing an offloading basically leads to a congestion (bunching) of vessels. A single vessels’ delay has a ripple effect on those behind it and in the highly competitive and precise world of shipping – this leads to demurrage charges charged by the ships to the cargo owners. In Pakistan this demurrage cost is in the millions of dollars paid for by the Oil Marketing companies who order the product.

So what are the reasons for this inefficiency? Data gathered at FOTCO shows that this is primarily due to slow pumping rates of vessels and receiving storage terminals. Data driven time-motion analysis of over 500 vessels which berthed at FOTCO demonstrates that correcting these two factors alone can save approximately 1,700 berthing hours annually (equivalent to over 70 days of jetty availability). If achieved this could lead to berthing another 35 additional vessels per year.

FOTCO’s jetty is designed to handle flow rates of 5,000 tons per hour (TPH). However, vessels calling at FOTCO are expected to formally commit to maintain a very conservative average flow rate of 2,500 TPH (representing only 50% of FOTCO capacity). Despite this commitment given by every vessel at the time of berth, many vessels fail to achieve the agreed flow rate, resulting in prolonged berth, disruption to vessel sequencing, and congestion for subsequent arrivals.

Some industry stakeholders have attributed delays to factors like limited night navigation, sampling done by the Hydrocarbon Development Institute of Pakistan (HDIP) in the monsoon season or the use of a single pipeline for both diesel and Motor gasoline. However, the same dataset of 500 vessels demonstrates that these factors contribute only minimally to overall delays.

Claims that a dedicated pipeline for Motor gasoline and Diesel each would substantially improve turnaround time is also not supported by the data. Currently the same line handles both products with a process of “pigging” which “cleans” the line when one product come after another. This is a standard industry practice where multiple products use the same pipeline (and is the same method is used by Pak Arab Pipeline Company – PAPCO – to transfer these two products from Karachi to Mahmoodkot).

FOTCO has recently (effective 1st January 2026) introduced a penalty system for vessels which do not adhere to their own terms of keeping an average of 2500 Tons per hour (TPH) flow rate. Non-compliance charges will apply only when vessels miss their own declared flow rates, not to oil marketing companies (OMCs) but to the vessel. This penalty system is expected to bring in some discipline and adherence to the 48-hour laycan allowance.

However punitive measure alone will not drive success in achieving maximum efficiency. Is there way to bring the discharge time even below the 48 hours stipulated in the laycan? FOTCO believes there is. According to them if they can discharge white oil into their own tanks (as opposed to various oil company’s tanks) using their own equipment and pipelines, they can assure a turnaround time of any vessel of up to 75,000 MT within the stipulated 48-hour laycan time. They further assert that smaller vessels can have a turnaround time of even lesser – in some cases up to just 36 hours!

What would this cost the country? The precise capital cost of such an arrangement is yet to be determined. However, the question policymakers must ask is straightforward: If a cost benefit analysis shows that this model is cost-neutral or economically positive, reduces demurrage, improves national supply reliability, and enhances port efficiency, why would Pakistan not pursue it?

This is not merely an operational adjustment. It is a potential game changer for the national oil supply chain, reducing foreign exchange outflows, improving energy security, and optimizing critical port infrastructure.

Copyright Business Recorder, 2026