The Oil and Gas Regulatory Authority (Ogra) has projected enhancement of petroleum products storage capacity in the country to 600,000 metric tons in the next two to three years. In order to attract investment in storage development, Ogra in the last three years has granted 41 licences for storage construction to interested companies and monitored these projects to ensure sustainable logistics. These steps resulted in the addition of around 288,733 metric tons storage in the system (petrol 102,031 and diesel 186,802) since petrol crises in 2015 and more than 600,000 metric tons of storage is expected to be completed within next 2 to 3 years.
Ogra acknowledges the commercial difficulties faced by oil companies when petroleum prices are declining, but appears to be in no mood to accept this as an excuse for not complying with regulatory requirements. Ogra has made it mandatory for the oil marketing companies (OMCs) to enhance oil storage facilities before applying for marketing licenses.
In December 2018, overall demand for gas surged manifold due to increased consumption and the situation became more critical due to sudden reduction in gas supplies from two gas fields namely Gambat (PPL) and Kunnar-Pasakhi Deep (KPD) owned by OGDCL due to condensate storage problem as refineries stopped uplifting condensate. This condensate problem reduced gas supply by 50 mmcfd, further worsening the line pack, thus resulting in even greater drop in gas pressure.
The amount of demurrages paid by Pakistan State Oil (PSO) has increased ten times in the last five years due to storage problems. The demurrage charges of PSO have gone up to $20.4 million in 2017-18 from $2.5 million in 2013-14. Management of PSO accused the OMCs for incurring demurrages to PSO on import of POL as most of them had no storage capacity.
In January 2015, a commission set up by the prime minister to investigate the 10-day oil crisis which almost paralysed the country blamed almost the entire oil supply chain. At that time, the two-member commission comprising Zahid Muzaffar and Zafar Masud recommended structural reforms in the energy sector and maintaining above 300,000 tons of fuel stocks at all times to cover at least 20 days of consumption.
In a report released on October 2018, Senate Standing Committee on Petroleum recommended the Petroleum Division to incorporate development of storage capacity in the existing rules and regulations for OMCs.
The parliamentary panel's report recommended that the companies, which have been granted provisional licenses, should also comply with the new proposed license procedure and the Petroleum Division should review the policy for granting license in the light of the recommendations. Ogra should strictly monitor those policies under which licenses are granted to the OMCs. In case of violation, licenses should be suspended till the time an OMC fulfills the licensing conditions.