Oil companies warn for halting operations to produce POL products

KARACHI: Almost all the oil refineries including Byco and Parco in Pakistan warned the government to stop production of Furnace Oil in next few days, the sources in Oil and Gas Regulatory Authority (OGRA) said here on Thursday.

The source said, “Storage facilities have been topped up with furnace oil and now they are now completely full”.

According to sources, Byco and Parco wrote letters on November 12 and 13 respectively to the Petroleum Secretary, informing that their storage capacities were full and had no capacity left to store other POL products. And so the companies have no choice but to halt the production of POL products. The letter asked that OMCs storages are full of furnace oil so where to store the fuel products?

Oil industry sources said that the closure of furnace oil-based power plants has led to this issue as the prime minister asked the power plants to run power generating units on LNG instead of diesel and furnace oil, in his decision on October 27, 2017.

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The reason for taking this decision was to stop running expensive power plants and control the huge debt issue.

Finally, upon letters sent to authorities by Byco and Parco, a meeting was held chaired by secretary petroleum. Representatives of refineries, oil marketing companies and oil companies’ advisory council were part of the meeting.

Oil Refineries have put forward their demand to the authorities in this meeting, the source said. They have asked the government to run the efficient furnace oil-based power plants on merit. They want that per day 10,000-12000 tonnes of furnace oil is lifted from local refineries. Otherwise, oil wells will close down. Secretary petroleum said that their demand will be taken to the power division for further discussion.

Pakistan’s oil production averaged 87.8000 bpd in October 2017 marginally up on yearly basis (4 per cent MoM). Oil production remained flat in October 2017 on the back of lower flow from Nashpa, Adhi and Makori East fields (collectively constitute about 43 per cent of Pakistan’s total oil production), cumulatively down 14 per cent year on year, the analyst said.

Average oil production during 4MFY17 from Adhi and Makori East fields were down 5 per cent and 7 per cent, respectively, Nashpa registered 15 per cent growth during the same period, primarily owing to additions from Nashpa well 6 and 7 which cumulatively added around 5000 bpd of oil during Sep-Oct 2016.

During the outgoing month, Pakistan gas production declined by 3 per cet to average 3.7000 mmcfd, affected mainly by lower production from Mari, Sui, Qadirpur, and Uch (collectively constitute about 42 per cent of Pakistan’s total gas production), cumulatively down 4 per cent YoY.

During last four months, Pakistan’s oil production was up 8 per cent YoY primarily on the back of incremental production from Nashpa and additional gas from Mardankhel. However, gas production declined by 2 per cent (slightly below our expectation of muted growth) owing to the absence of any major addition and natural depletion of existing fields.

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Arshad Hussain
Arshad Hussain
The author is business reporter at Pakistan Today. He can be reached at [email protected] He tweets @ArshadH47736937
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