CEO Shell Pakistan admits OMCs manipulation

Aftab Ahmed

Islamabad: Chief Executive Officer (CEO) Shell Pakistan Haroon Rashid has admitted the manipulation of Oil Marketing Companies (OMCs) through small traders and dumping products for opportunistic gains witnessed nowadays.

Shell Pakistan was one of the companies which had curtailed oil supplies to its retail outlets during June this year when oil prices witnessed a sharp decline to make money during the next month of July with expectations of an increase in oil prices.

This was also among those nine companies involved in hoarding products and was fined by the regulator–Oil and Gas Regulatory Authority–(OGRA).

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During a meeting held on oil prices, Mr. Haroon CEO Shell was invited for a short period through video link for industry view. He explained that the existing pricing system based on PSO’s benchmark adversely affects refineries’ revenue when product prices become cheaper than the crud while OMCs suffer during the continuous declining cycle.

He said that, therefore, fortnightly Platts-based price would reduce the impact of volatility. The burden of a hike in the consumers’ process will be reduced, and OMCs manipulation through small traders will not hurt the market.

He further said that it would improve the cash flow of refineries, the chances of one OMCs dumping product to another, and the Iranian smuggled oil impact will be minimized. The frequency of reset to the market being fortnightly will reduce opportunistic gains by such practices. Consequently, market distortion as witnessed nowadays will be minimized or avoided.