Pakistan, struggling to keep up with rising domestic demand, will import almost 60 per cent of diesel requirements by 2009 despite the country's new-found status as a gasoline exporter, industry sources said yesterday.

Demand for high speed diesel, pegged at about 7.2 million tonnes this year, is forecast to grow at a steady four to five percent a year, according to the oil ministry. By 2009, domestic high speed diesel consumption is seen reaching about 14 million tonnes of which some 8.2 million tonnes will have to be imported if plans for new refineries do not materialise.

Pakistan commissioned in February the Pak-Arab (PARCO) refinery with a capacity of 4.5 million tonnes per year (tpy), which increased the country's refining capacity by 40 per cent to 11 million tonnes a year.

The new refinery means that Pakistan is now running a surplus of gasoline, which PARCO started exporting through a tender this month. Market sources said the tender was awarded to Germany's Veba Oil, who would likely supply East Africa.

They said the 90-octane unleaded gasoline grade PARCO was exporting does not meet European or U.S. standards, but was the main staple of African countries. But output of high speed diesel from the PARCO plant will cover only a fraction of projected Pakistan demand.

High speed diesel, used in Pakistan for transportation, is the country's main oil product requirement besides fuel oil. "The refinery is definitely not enough to meet domestic diesel demand," said an official at the Oil Ministry.

"Last year we imported about five million tonnes of high speed diesel. PARCO produces only about 1.6 million tonnes (of HSD), so we still have a very big deficit," he said. Private local company Bosicor Pakistan has plans to build a small 1.5 million tpy refinery, while a joint Pakistan-Iran refinery project has been mooted since the early 1990s.

Ministry officials said plans for both refineries had yet to be finalised. "The plans have not been dropped but they are in the initial stages, so we don't know when they will actually become a reality," said one official.

In 2001, Pakistan's high speed diesel imports are expected to be 4.4 million tonnes, the bulk of which will be covered by a term contract between Pakistan State Oil (PSO) and Kuwait Petroleum Corp for three million tpy.

The remaining imports will be supplied by oil majors Shell and Caltex, who are the only two other companies alongside PSO currently marketing diesel in Pakistan. High speed diesel imports into Pakistan were previously the sole responsibility of the oil ministry, but deregulation of the market allowed PSO, Shell and Caltex to start imports from April.

Pakistan will also run a deficit of fuel oil, despite the start up of the PARCO complex. Imports this year are expected to run at about five million tonnes. But fuel oil consumption by 2009 is forecast to be steady from current levels or even slightly lower as Pakistan increases the use of natural gas in power generation.

"Fuel oil will partly replaced by natural gas because there has been some good gas finds in Pakistan. In three to four years, gas may be supplied to power stations and fuel oil imports could be reduced substantially," said a ministry official. The Pakistan government is pushing to convert fuel oil-fired power plants to natural gas to cut down energy import bills.