KARACHI:* The Oil and Gas Regulatory Authority (Ogra) has advised local refineries to enhance agreements with oil marketing companies (OMCs) by incorporating legally binding clauses to ensure a structured and enforceable framework for prioritizing the upliftment of locally produced petroleum products.
Regulatory Guidelines & Compliance
In an official letter sent to refineries on Friday, Ogra emphasized that such agreements must align with *Rule 9 and Rule 53(iv) of the Oil Rules, 2016, as well as *licensing conditions that mandate compliance with regulatory directives. The regulator clarified that the *Product Review Meeting (PRM) SOPs, which assess local production adequacy before imports, were explained to refineries during a *March 3 meeting in Karachi.
Ogra also stressed the importance of a “take-or-pay” clause in refinery-OMC agreements to reinforce supply commitments. It highlighted that local production insufficiency—not just a deficit—must be assessed before approving imports.
Refineries’ Responsibilities & Market Concerns
While Ogra reiterated that *petroleum product sales remain a commercial matter, it insisted that *local allocation should remain the first priority before import approvals. The regulator rejected claims that refineries bear no responsibility for local upliftment, urging them to adopt legally binding clauses to uphold this obligation.
However, the Oil Marketing Association of Pakistan (OMAP) has voiced strong opposition to the *take-or-pay clause, warning that it could **jeopardize OMCs’ financial stability. The association cautioned that such an arrangement would *favor refineries and large OMCs, leading to monopolistic control while stifling competition and discouraging new entrants in the petroleum sector.
OMAP urged Ogra to reconsider its stance, arguing that the regulator is *overlooking financial challenges and market realities, which could negatively impact the overall *efficiency of the petroleum supply chain.
