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Congestion at ports causes headache to petrol, oil shippers

ISLAMABAD: Port congestion and relating infrastructure constraints have put the shippers of strategically important supplies in a tough situation besides economic losses to the nation as the ministries of energy and maritime affairs like to run port operations to their preferences.

This results in underutilisation of port infrastructure and an unnecessary wait for ships and resultant heavy demurrages that ultimately stand transferred to consumers and sometimes even thre­a­ten the supply chain with disruptions, said an official.

He added that the two ministries had been in contact to put in place standard operating procedures (SOPs) to operate the country’s port facilities and supply chain to optimal potential but to no avail.

In a working paper submitted to the ministers for energy and maritime affairs, the Directorate General of Oil and Gas Regulatory Authority (Ogra) has pointed out difficulties being faced by the oil industry which in recent weeks kept lined up in dozens to wait for discharging various petroleum products (POL).

The two ports in Karachi — Karachi Port Trust (KPT) and Fauji Oil Terminal (Fotco) — handle POL imports and are managed in a way that crude oil and petrol are predominantly handled at KPT, while diesel, furnace oil and some petrol cargoes are berthed at Fotco. There is only one jetty at Fotco and three are at KPT. Fotco can handle 14-15 vessels in a month, which is sufficient only for diesel and petrol cargoes.

However, due to six-seven cargoes of furnace oil arriving in a month during the summer season, the berthing sequence cannot be followed on a ‘first come first serve’ or any other basis. These limitations compel the petroleum division to monitor the cargo berthing at Fotco in view of the overall supply situation of the three products across the country which then intervenes through the maritime affairs ministry for prioritising certain cargos to avoid supply disruption.

As White Oil Pipeline (WOP) originates from Fotco, the entire diesel requirement of upcountry locations is met by transport of high speed diesel through WOP. The multi-grade movement project for transporting petrol in addition to diesel is completely booked to capacity. Therefore, additional volume of petrol is expected to be handled at Fotco — a challenge that required careful and vigilant handling.

The maritime affairs ministry has been worry of frequent interventions by the Petroleum Division and asked it to keep certain issues in mind before requesting priority of oil vessels at relevant ports. It directed that there should be proper lineup of POL vessels in accordance with the laycan assigned and that Pakistan National Shipping Corporation’s (PNSC) vessels, including those chartered by it, would take precedent as per the government policy.

The Petroleum Division believed that this preference was limited to PNSC’s own ships under the government decisions and the maritime affairs ministry was adding the chartered ships at its own and more often than not creating problems for the petroleum supply chain.

The ministry has also asked the Petroleum Division that oil companies should be clearly directed to resolve payment issues well in time with charterers to avoid delays in berthing or cancellation of pilots. Also, product samples should be taken at the outer anchorage to save time and assigning priority to oil vessels should not be a norm rather an exception and hence applied selectively only in urgent cases.

The Petroleum Division was of the opinion that the maritime affairs ministry should not protect PNSC’s interests at the cost of disrupting the oil supply chain in the country as in the past PNSC vessels had been given priority and that the refineries had expressed reservations over lapses of vessel nominations and delayed arrivals of crude vessels. “PNSC should also be persuaded to focus on better performance and delivery,” it insisted.

The oil industry on the other hand agitated that a single jetty at Fotco was congested and development of a second jetty was urgently required. It pointed out that a new jetty could be developed in less than $80 million but oil companies and the exchequer were paying more than this amount every year on demurrages, fees, etc.

The industry highlighted that Fotco and KPT handled over 450 vessels a year that waited an average of at least five days and the oil companies paid about $45m in demurrage alone last fiscal year.

Ogra has advised the government that maintenance and repair of Oil Pier-I should be postponed till December 2021 and Oil Pier-II Chiksan marine loading arm should be repaired urgently and night navigation facility be made available. Ogra has also advised that vessels less than 40,000 tonnes should not be allowed berthing.

In a working paper, the Petroleum Division has suggested that Fotco should be converted into a purely finished products and fuels jetty while condensate and naphtha export vessels should be shifted to Keamari (Karachi Port) from Fotco (Port Qasim). It has also demanded that a dedicated tanker discharge line from Fotco jetty to WOP should be installed to handle discharge of petrol and diesel cargoes separately. Besides night navigation facilities at Fotco, the Petroleum Division has also demanded that implementation of channel widening plan of Port Qasim for LNG vessels should be expedited for which “PQA has been charging a hefty amount per vessel”.

Simultaneously, it said, construction of an additional petroleum jetty at Port Qasim should be expedited, besides ensuring “necessary repairs and arrangements for integrity and maintenance at the three oil piers at KPT” and Pakistan State Oil should be facilitated to implement its project relating to pipeline connectivity between the KPT and PQA for flexibility of operations and security of supply chain of petroleum products.

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