Islamabad [Pakistan], June 22 (ANI): Amid an acute shortage of petroleum products, refineries in Pakistan have urged the federal government to take urgent steps to resolve this issue as a trade credit crisis would completely engulf oil marketing companies too after refineries.

Foreign banks are still not confirming local refineries' letters of credit (LCs) for crude oil imports.

In January this month, oil refineries in the country had warned the government of a looming shutdown of their operations in a couple of weeks due to high and yet rising stocks of furnace oil.

The News International reported that the foreign banks were still not confirming local refineries' letters of credit (LCs) for crude oil imports.

Oil marketing companies (OMCs) are also struggling to get their LCs confirmed by the global banks for the import of petroleum products, it was revealed on Monday during the meeting of the representatives of refineries and OMCs with the high-ups of the Ministry of Petroleum Division, The News International reported.

Citing sources, the publication reported that the issue of blocked trade credit is on the verge of turning into a crisis for Pakistan's oil sector.

"The severity of the issue can be gauged from the fact that even state-owned Pakistan State Oil has now started feeling the heat as two of its cargos carrying petroleum products are anchored in the international waters and can't enter the country's territorial water to offload the cargo due to non-confirmation of LCs by the international banks," a source said.

There will be a high risk of closure of refineries in February in the absence of a significant upward revision in demand, Pak-Arab Refinery Company Limited (PARCO) had said.

The total monthly furnace oil production of the refineries was more than 200,000 tonnes, said PARCO, adding that this is on top of about 700,000 tonnes currently in stocks of refineries, marketing companies and power plants.

Calling for an immediate need to address the critical issue of high furnace oil stock levels, the refineries have demanded an urgent high-level meeting on the issue to work out a firm demand for furnace oil for February to enable the industry to plan refinery operations.

Due to high furnace oil stocks, at least three refineries recently faced shutdowns and others had to go for production cuts, according to Dawn. (ANI)