Refineries in crisis mode, as govt ponders ban on import of furnace oil

Byco Refinery shut down its 120,000 tons capacity refinery and various major refineries across the country are running at sub-optimum capacity

ISLAMABAD: Likelihood of a ban on import of furnace oil is under consideration by the government due to topped up storages and supply challenges.

The authorities have requested oil-based power plants to buy furnace oil stocks to relieve pressure on refineries which face a crisis after PM Shahid Khaqan’s Abbasi decision to ban imported fuel-based power plants, reported Dawn.

Also, Byco Refinery shut down its 120,000 tons capacity refinery and various major refineries across the country are running at sub-optimum capacity. Six shiploads of furnace oil ordered by state-owned fuel giant Pakistan State Oil is set for arrival at Karachi.

A meeting was held between heads of all refineries, PSO and secretary petroleum on Wednesday. Secretary petroleum and power secretary will hold another meeting before the issue is taken to PM Shahid Khaqan Abbasi for a final decision.

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Petroleum division was informed by Byco it had shut down its biggest refining complex due to low lifting of high sulphur furnace oil (HSFO) due to lack of assistance from oil marketing companies (OMCs). Byco added its smaller unit of 35,00 tons capacity was running at minimum possible throughput.

Major oil refineries like National Refinery Ltd, Pakistan Refinery Ltd, Parco and Attock Refinery are said to be operating at 60-70pc of its capacity.

The heads of refineries told the government to not ignore furnace oil consumption and shouldn’t be prioritizing LNG as a replacement so quickly, which would cause closure of refineries. They added transporting POL products for export to Karachi would become problematic in event of such a situation.

Attock Refinery would get significantly impacted by this, which was utilizing full crude from Kohat and affect allied gas productions from fields in Khyber-Pakhtunkhwa.

The situation is heading towards a crisis, said a participant while quoting Secretary petroleum. He shared domestic production of kerosene, petrol, diesel and jet fuel will need to be imported incurring a lot of foreign exchange expenditure.

Due to this situation, some oil-based power plants were requested to purchase furnace oil from local refineries. This would allow refineries to ramp up production of other petroleum products.

30pc of furnace oil is produced by local refineries at rate of 10,000-12,000 tons per day and 70pc or six million tons is imported.

PSO warned its storages were almost full and it was unable to lift HSFO and LSFO from local refineries besides import cargoes could result in huge demurrages and could lead to a complete shutdown of refineries.

It said, the situation was alarming and could affect availability of other POL products. PSO suggested to prop up Genco’s storages, which would give it breathing space for receiving one cargo and permit to lift 50pc HSFO production from local refineries and remainder from other OMCs.

 

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