The meeting of the Economic Coordination Committee (ECC) of the Cabinet presided over by Finance Adviser Dr Abdul Hafeez Shaikh has constituted an inter-ministerial committee for the selection of an appropriate strike price for about nine per cent of oil imports (about 15 million barrels).
Special Assistant to Prime Minister for Petroleum Nadeem Babar will be spearheading the committee formed by ECC to explore various call options for hedging prices for the petroleum products imported by Pakistan. The committee will have representation from State Bank of Pakistan, Pakistan State Oil, Finance Division, Petroleum Division, Law Division and Planning Division to explore call option for 15m barrels of oil for one or two years divided in 12 equal monthly amounts for different stock price above current Brent as long as fee was within acceptable range.
Under the terms of reference (TOR) PSO will act as the counterparty while the Ministry of Finance shall give a guarantee of performance by the PSO. The Oil & Gas Regulatory Authority (Ogra) would also be given the policy direction to include the monthly price of the option in the cost of LNG or any other oil product chosen in announcing the monthly prices.
Pakistan’s total imports are about 175m barrels per annum of oil equivalent. This includes total crude imports of 68m barrels per year, 45m barrels of petrol, 19m barrels of high speed diesel and 6m tonnes of term contracts of LNG.
