Pakistan less enthusiastic about Saudi oil facility

Islamabad, Nov 24 (UNI) Pakistan is less enthusiastic about the Saudi oil facility because the drastic drop in oil prices in the international market has eased pressure on the country's foreign exchange reserves.

''The unbearable pressure on Pakistan, with its foreign reserves plummeting extremely low, has evaporated due to the huge fall in oil prices,'' a senior official said in Islamabad today.

Pakistan was earlier paying about 1,800 million dollars for its monthly oil import bill and one barrel was costing as much as 144 dollars against the present 800 million dollars a month for the same, taking off the pressure on Pakistan.

''Arranging this amount of money is not a problem for us because this has been our standard oil import bill before the unusual increase in the prices,'' the official observed.

While working out the oil facility, he added, the real issue was the price that had to be locked in at the time of signing of agreement with Saudi Arabia for supply on deferred payments.

''The price locked in can't be later subjected to downward or upward revision regardless of the cost of per barrel oil in the international market. Once it is fixed and inked by the two sides, it becomes final,'' he explained.

He reasoned that if the Saudi oil facility was started today and the international oil price fell below the one agreed with Riyadh, Islamabad would be a loser.

However, if the price escalated above the rate agreed with Saudi Arabia, Pakistan would benefit.

For quite some time, the official conceded, the main reason behind non-finalisation of the Saudi oil facility had been the constant decrease in international prices. Pakistan was wary of a possible negative impact of a further drop in fuel prices, he continued.

When the oil prices were constantly soaring, the official pointed out, international forecast was that they would touch 170 dollars a barrel.

He would not say how long Pakistan would wait to decide on availing the Saudi oil facility and whether Islamabad would go for it at all.

He claimed there was a clear willingness on the part of the Saudi government to grant the favour at a time when Pakistan was facing a financial crunch. Islamabad had regained some confidence as a result of fruitful talks with the International Monetary Fund on the standby package, he maintained.

The last time Pakistan benefited from a similar Saudi facility was in 1998 after Islamabad detonated nuclear devices and was slapped with crippling international sanctions.

The new Saudi oil facility will be a huge proposition, 4.9 billion dollars oil to be available in three to five years. It was first taken up by Prime Minister Syed Yousuf Raza Gilani in the company of Asif Ali Zardari (before the latter's election as President) during his first official visit to Saudi Arabia.

Later, President Zardari discussed the facility with the top Saudi leadership during his maiden official trip to Riyadh.

Officials agreed Pakistan had not shown much urgency for vigorously pursuing the Saudi oil facility even when the oil prices were skyrocketing.

UNI XC MP CS1258