Pak Refinery maintains production capacity despite smuggling, imports

Pakistan Refinery Limited (PRL), which is one of Pakistan's largest with a capacity of producing 50,000 barrels per day (bpd), has maintained production capacity of around 75% in the six months ended Dec 31, the same as in previous year despite influx of smuggling and imports of petroleum products.

For the last few years, Pakistan's refining sector has been under severe stress and facing all sorts of challenges, PRL Managing Director Zahid Mir told Nukta on Friday.

Companies, including Pakistan Refinery, are facing challenges such as poor upliftment due to smuggling and excessive imports, forcing refineries to give discounts and accrue heavy inventory losses due to decrease in product pricing and almost no local demand of furnace oil, Mir said.

Pakistan diesel imports recorded an increase of 26% to 1.412 million metric tons (MT) in the eight months ended Feb 28 compared with 1.120 million MT during the same period last year, according to data of Oil Companies Advisory Council or OCAC, an organization which compiles data of fuel consumption, imports, and exports.

Petrol imports during the same period recorded an increase of 19% to 3.673 million MT.

The ongoing lack of rainfall in the country will likely affect diesel sales in the coming months due to delays in the harvesting season, he said. This, combined with the fact that it coincides with the holy month of Ramadan during which sales of both petrol and diesel are typically lower, will put additional pressure on refinery upliftment, if imports are not reassessed and curtailed to reflect stocks and sales trends, Mir said.

Overall, diesel sales in February declined by 4% to 428,000 MT (imports and refining both included) compared with the same month last year.

Meanwhile, sales dropped by 28.6% from 600,000 MT mark in January, OCAC data showed.

The sales of petrol dropped by 11% to 556,000 MT when compared with January while they rose by a paltry amount of 2% when compared with February 2024, the data said.

The company suffered a loss of PKR 2.2 billion in the six months ended Dec 31 compared with a profit of PKR 6.5 billion in the same period last year, according to the company report posted on its website.

PRL remains committed to expansion, which will inter alia double the refinery’s crude processing capacity from 50,000 barrels per day to 100,000 barrels per day, the company said.

In this regard, the Front-End Engineering Design (FEED) work was completed in September as per schedule and the Engineering, Procurement, Construction and Finance (EPCF) tendering process is in place to be followed by the selection of the EPCF contractor and consequent financial close.

The company also continued interactions with various organizations to explore possibilities for bringing in a strategic investor for the refinery upgrade and expansion project.