KARACHI: The biggest oil refinery in Pakistan, Cnergyico PK (formerly Byco Petroleum), has stated that it may soon sign a “final agreement” with the government to upgrade both of its refineries in accordance with the updated Pakistan Oil Refining Policy for Up-gradation of Existing/Brownfield Refineries, 2023.
An official involved in the refinery’s upgrade process stated in an interview with The Express Tribune that Cnergyico has not yet signed the final deal.but anticipates signing the agreement with the government shortly. He declared, “The company is ready to upgrade its plants in every way.”
With the improvement, the refinery will be able to produce more premium, high-margin products like petrol and diesel while drastically reducing the production of antiquated goods like boiler oil. As a result, imports of pricey refined goods will significantly decline, saving foreign cash.
As per the report submitted to the Pakistan Stock Exchange (PSX) on Friday, the refinery, which has an installed capacity of 156,000 barrels per day for the processing of crude oil into refined products, expects to invest more than $1 billion in the upgrading.
The announcement stated, “Yet, exact cost estimates will be established post Front-end Engineering Design (FEED) of the upgrade project.”
After the conceptual design or feasibility study is finished, the fundamental engineering work is completed, or FEED. This phase is known as pre-engineering, procurement, and construction, or pre-EPC.
The official claims that since the final agreement was signed, there has been a five-year period in which to finish the upgrade under the recently modified policy. “Cnergyico will finish the procedure in the allotted time,” he declared.
According to the source, the policy set a six-month deadline for reaching financial close, or securing full financing, and it was assumed that the business would accomplish this within that period.
He emphasised that in order to lower the output of furnace oil, the refinery was employing a combination of light and heavy crude. It is nevertheless producing a sizable amount of fuel oil in spite of this.
Based on approximations, 40–45% of the refinery’s furnace oil production comes from processing crude. Compared to the lighter crude, the heavier crude contains more boiler oil. Furnace oil was widely used to generate energy until a few years ago. Nevertheless, the government was compelled to phase down the oil-run plants due to the establishment of other, less expensive power facilities.
Additionally, as of January 2020, the UN marine agency forbade the use of boiler oil with a high sulphur content in maritime transportation. An industry representative recently stated, “Furnace oil is being sold at a price lower than that for crude oil.” Furnace oil is being exported by a few refineries in order to get rid of surplus material. Modern technology-driven plant enhancements will aid in the conversion of furnace oil into gasoline and diesel.
In its announcement, Cnergyico PK stated that it had already promised to modernise both of its refineries in 2020 and 2021 in order to produce diesel and petrol that meets Euro-V standards while also lowering the output of fuel oil. It stated that the Pakistan Oil Refining Policy for Up-gradation of Existing/Brownfield Refineries, 2023, has been amended by the government, following consultation with all refineries.
About $5–6 billion will be invested in Pakistan’s refining industry as a result of the initiative. Prior to this, Pakistan Refinery Limited (PRL) declared that, in accordance with the revised strategy, it had begun the plant improvement project, with an anticipated $1.7 billion in investment.
The corporation wants to go from processing 50,000 barrels per day to 100,000 barrels per day, which is a twofold increase. PRL officials anticipate that the project will be finished by the end of 2028.
Local research firm Arif Habib Limited recently declared, “ATRL (Attock Refinery Limited) will reach a refinery upgrade agreement soon.” The statement read, “Our expectations are based on the fact that ATRL has the strongest balance sheet in the refinery industry and a substantial cash position of Rs66 billion (Rs616 per share) with no debt.” There are currently five oil refineries in Pakistan: PRL, Cnergyico PK, Attock Refinery, National Refinery, and Pak-Arab Refinery (Parco).
