Evaluation of Pakistan’s Current Petroleum Supply Chain and Proposals to Enhance its Transportation Efficiency

Abstract

Pakistan is a developing country with economic issues that need to be addressed in order for the country to progress and prosper. Imports and exports decide the economic growth of a country. Unfortunately, Pakistan’s economy greatly depends on imports in various sectors especially the energy sector. POL (petroleum, oil, lubricants) comprises major part of Pakistan’s Energy sector imports. Pakistan imports 70% of its MOGAS and 35% of its HSD total consumption. Transportation of petroleum products within the country entails significant cost along with varying degree of risks. Presently Pakistan POL supply chain is primarily based on road transportation with 69% share, pipeline share is 29% and railway share is only 2%. If Pakistan continues with the same pattern future forecast of traffic and POL demand shows that it will fail Pakistan road infrastructure in the near future. The primary options for POL transportation include Pipelines, Vessels, railroads and road tankers world over. Pipelines are considered best for transporting POL, Vessel/Barge the cheapest and rail transport is also very efficient due to its load carrying and routing flexibility. However, each of the mode of transportation have its inherent pros and cons. The most efficient system for a country will be decided based on its Geography/Topography, existing transportation infrastructure, Economic activity, and Demography. White Oil Pipeline (WOP) and Mahmoodkot-Faisalabad-Machike (MFM) are the two major pipelines in Pakistan, their capacities were utilized 28.6% and 31.3% respectively, which are under optimum utilization. Underutilization of pipeline and Railways (which are preferred mode of transportation worshortlyn enhanced transportation of POL through road network. Therefore, present POL supply chain in Pakistan is enhancing cost of transportation as well as ri,sks/hazards. This research aims to develop a long-term solution by fully exploiting pipeline capacity and the untapped potential of Pakistan railway’s. Model-I considers 20% share of Oil movement through Railways, results reveal that it can save PKR 30 billion, save PKR 5.17 million per mile per year in maintenance costs, and reduce the movement of around 8,000 vehicles. Model-II considers using existing pipelines at full capacity, with the railway still accounting for 20% of the total share, results reveal that it can save PKR 63.6 billion, save an extra PKR 5.21 million per mile per year in maintenance costs, and reduce the movement of around 6,000 vehicles. In addition to Model-II considerations, Model-III consider Machike-Tarujabba pipeline is built and used at full capacity, results reveal that it can save PKR 97 billion, save an extra PKR 3.89 million per mile per year in maintenance costs, and reduce the movement of around 6,000 vehicles. Thus; based on the data analysis carried out in this study, Model-I be adopted immediately with progressive adoption of Model-II and Model III to enhance POL supply chain and reduce associated risks/hazards in Pakistan.