"We have been pressing Pakistan since 2005 to remove petroleum products particularly diesel from the list of items it does not allow to be imported from India," the official said. "The issue may again be discussed when Commerce Secretaries of the two nation meet in Islamabad later this week."
The then Oil Minister Mani Shankar Aiyar had in June 2005 raised the issue of India exporting diesel to Pakistan during his visit to Islamabad. Pakistan at that time promised to look into the demand but has not acted since then.
Pakistan imports 4-5 million tons of diesel from Kuwait every year. It has preferred the fellow Islamic nation over India as it gets a substantial discount as well as an extended credit period to make payments.
The official said state-owned Indian Oil Corp (IOC) had in 2005 offered to sell 3,25,000 tons of diesel to Pakistan during six months period beginning October 2005 at a discount to international price.
That year, Pakistan, which does not have any refinery in the Lahore-Multan area, had sought price quotations from IOC for import of diesel at Lahore, Jhelum and Karachi.
IOC had proposed to supply 1,00,000 tons of diesel from Jamnagar to Karachi through the sea route and the remaining 2,25,000 tons through land route.
While the diesel shipment for Karachi would have been sourced from Reliance Industries'' Jamnagar refinery, IOC planned to pipe diesel from its Panipat refinery in Haryana to Jalandhar in Punjab from where it had planned to move it by road/rail to Lahore.
The official said IOC had proposed to price the product in such a way that the landed cost at Lahore was at least 50 cents per barrel less than the landed cost of fuel from Kuwait.
But Pakistan choose to ignore IOC's offer and continued to import fuel from Kuwait.
"If the restriction goes, we are ready to supply diesel as well as petrol to Pakistan... its an opportunity and a market for us," IOC Director (Refineries) B N Bankapur told reporters here today.
IOC would consider expanding its 300,000 barrels per day (15 million tons) Panipat refinery if it gets an opportunity to sell fuel into Pakistan, he added.
Besides IOC, private sector Reliance and Essar Oil too may look at selling fuel into Pakistan if the ban is lifted. Reliance and Essar have refineries on Gujarat coast, just hours away from Karachi.