Pakistan will save about $5-6 billion a year simply by using the Pakistan National Shipping Corporation (PNSC) as the backbone of its international maritime trade, while also enabling it to purchase more oil carriers and tankers to expand its liquid freight capacity.
Former executive director Syed Muhammad Obaidullah suggested in a webinar titled ‘Global Oil Crisis Amidst Covid-19 and its Effect on Shipping Sector: Challenges and Prospects for PNSC’ on Thursday.
Describing the root cause of the current oil crisis, he said that turmoil began with the dispute over oil supply between Russia and the Kingdom of Saudi Arabia.
“Though the conflict got resolved following the intervention of US President Donald Trump, the outbreak of Covid-19 pandemic soon after rendered the resolution almost irrelevant,” he said.
“With the suspension of air operators, transport, and rail services coupled with the lowest level of industrial productivity, the demand for oil dropped significantly,” he added.
He clarified that the development had a devastating effect on the oil markets across the globe in general, and in particular on the US market (WTI) and the Canadian market, due to storage capacity problems at the end of both suppliers and buyers.
The oil prices in these markets have sunk into negative territories impacting many industries worldwide including shipping. Having spoken about the possibility of rising oil prices for Pakistan, the speaker believed that the situation may not help the country at all.
He claimed that Pakistan is buying crude oil from Brent and Dubai, which currently stands at around $15-20 per barrel, while the country’s low demand for oil following the pandemic does not give it anything to gain. Three of Pakistan’s five oil refineries shut down due to the depletion of their storage capacity and low demand on the market.
The inability of that level to generate diesel considerably impeded Pakistani refineries’ refined oil exports, he added. Explaining the current situation, Obaidullah briefed that Pakistan imported three types of oils, namely crude oil, refined oil, and LNG.