The Petroleum Division is looking for new analyzes and proposals for a new refining policy

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ISLAMABAD: The General Directorate of Petroleum of the Petroleum Division on Thursday requested the Managing Directors (DGs) of five refineries to provide further analysis as well as necessary changes in the Pakistan Petroleum Refining Policy Proposal 2021.

The Directorate General of Petroleum, in a letter dated August 18 to the Managing Directors/Chief Executive Officers (CEOs) of Pak Arab Refinery Limited, Pakistan Refinery Limited, Cnergyico Pk Limited, Attock Refinery Limited and National Refinery Limited, reminded them to submit the requests documents immediately.

According to the letter, the required information is still awaited and may be submitted for further consideration before submission of an abstract to the relevant forum for review.

Refinery officials previously met with Petroleum Minister Musadik Masood Malik on August 3 to discuss and review the draft policy in which they were tasked with providing analysis of individual modernization projects based on Internal Rate of Return (IRR)/ net present value (NPV) and their economics, analysis of combined upgrade projects based on IRR/NPV and their economics and IRR of 450K BPD Greenfield Refinery vs 450K BPD combined capacity as well as necessary changes in policy proposal of refining of Pakistan 2021 within two weeks.

However, refineries have not appeared with the information so far.

Oil division sources said the division has moved to introduce a new oil refining policy, adding that it is making necessary preparations before announcing a new policy under the deregulation scenario.

They said the division was consulting with stakeholders while reviewing the data submitted so far.

They added that the oil division will submit a summary to the Cabinet Committee on Energy (CCoE) which is expected to give formal approval to the new policy in the near future.

“The government intends to provide the necessary incentives and tariff protection to attract more investment in the sector as well as supporting existing refineries in their modernization and upgrading efforts, being a strategic asset for the country. “, said sources.

They also said that the existing refineries have the capacity to refine 0.45 million barrels per day and their upgrade cost will cost around $3-4 billion. However, if a new refinery with the same oil refining capacity is installed, it will cost around $13-14 billion, which is more than the country’s net reserves and clearly not a viable option.

“The viable option for the country is to upgrade existing refineries instead of installing new refineries to meet the EURO-V standard,” sources said.

It is pertinent to note here that in order to ensure the provision of quality products to the consumers, the government has constantly improved the desired specifications of the refinery products to keep in line with the global refinery market as well as the quality benchmarks international. Improved product standards have led to the upgrading of existing factories to remain commercially viable against the headwinds of importing petroleum products from the international market.

According to the sources, the five existing refineries mentioned above have constantly upgraded their installed configurations in accordance with new specifications and to compete with international suppliers in accordance with the tariff protection formula given in the budget speech on the Finance Bill 2002, whereby refineries were required to operate and be competitive in the market on their own, with no prerequisite for upgrading.

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