Pakistan plans to hedge some oil imports

Pakistan is planning to hedge a portion of its oil purchases to guard against volatile international prices, a government economic official said on Tuesday. Market sources said the government was initially likely to hedge only 10-15 percent of its total imports, as the country’s economy is not in a position to sustain the high risk involved in aggressive hedging. Pakistan, which imports about 80 percent of its oil, spent $8.01 billion on imports of crude oil and petroleum products from last July to April, down 7.58 percent from the year-ago period. Oil edged up towards $71 a barrel on Tuesday, having risen from around $51 at the end of April to hit a near eight-month high last Thursday. “At this point we are trying to work out the structure, and as to how much should we hedge,” a senior government official said, requesting anonymity. “We will probably need to have another round of presentations, and then see what is the best for us,” the official said. Sakib Sherani, a member of the government’s economic advisory council, told Reuters that the plan will soon be presented to the Economic Coordination Committee, the country’s top decision-making body on economic affairs. (June 16, 2009)