ISLAMABAD: The government is going to appoint Lead Consultant to interact with authorities in Saudi Arabia in helping out completing the feasibility study about the deep conversion refinery in Gwadar and petro-chemical complex, a senior official at the Petroleum Division said.
“Saudi Arabia has already announced that it is set to invest $10 billion for refinery and $1 billion for petro-chemical complex in Gwadar port city. Once the petro chemical complex is built and becomes operational, the import of chemicals in Pakistan valuing $4 billion will be done away with, the official told The News.
Lead Consultant will also help out Pakistan authorities too as in the country, apart from Saudi Arabia, the UAE is also going to install the refinery under Parco umbrella in Hub near Khalifa Point, Balochistan and more importantly a Chinese company is also inclined to establish the refinery in Gwadar.
To this effect, the official said, the Petroleum Division has sent a summary to the Prime Minister Secretariat seeking permission for the appointment of Lead Consultant and after the approval advertisement on national and global level will be issued seeking candidates for the slot of Lead Consultant. The feasibility study about refinery and petro-chemical complex normally takes 18 months to complete, but the authorities in Saudi Arabia are inclined to complete the task in 12 months and Lead Consultant will extend help to Saudi Arabia’s experts too.
The official said there is no on in Pakistan who has the expertise enough to help establish the deep conversion refineries in the country and this is the main reason that the Petroleum Division is all set to appoint Lead Consultant. Saudi Arabia wants to install the refinery with capacity to refine the crude oil of 300,000 barrel per day and UAE wants to establish the refinery with investment of $5-6 billion in Hub, Baluchistan with capacity of 250,000 barrels per day. And Chinese company is keen to establish refinery of 200,000 barrels per day with investment of $3-4 billion. “If these kind of art refineries are established, then by 2030, the country’s capacity to refine the petroleum products will go up to 45-50 million tonnes per annum which currently stands at almost 26 million tonnes,” said the official.
However, the refineries in Pakistan are not running at their full capacity, rather they are factually refining 12 to 13 million tonnes per annum. Today, Pakistan has a total refining capacity to process around 400,000bpd or about 19mtpa of crude oil, against the current demand of 24mtpa. Total global refining capacity is 97 million bpd, and Pakistan, with nominal world share of 0.4 percent, is ranked 48th. Demand for oil products in the country is expected to grow steadily at seven percent on year-on-year basis, according to recent studies, in particular for the furnace oil, motor spirit, diesel and aviation fuel, which accounts for 78 percent of total oil demand. Thus, the demand-supply gap will continue to strain heavily on the imports in future, if oil refining capacity is not added at a large scale.
Global refining capacity is expected to reach 115 million bpd by 2020 despite low crude oil prices and consequently the gloomy scenario for the oil and gas sector. It is however speculated that the global trend of declining oil prices would be arrested in the near future. Interestingly, most recent oil refining capacity additions have taken place in the Asia-Pacific region. Pakistan should therefore be no exception as future energy consumption poses a serious challenge for the nation and refining margins are high.
Currently, there are seven oil refineries operating in the country. Major players in the sector are Pak-Arab Refinery Co Ltd (Parco) of 100,000bpd (4.5mtpa), National Refinery Ltd (NRL) of 64,000bpd (2.9MTPA), Pakistan Refinery Ltd (PRL) of 47,000bpd (2.1mtpa), Attock Refinery Ltd (ARL) of 43,000bpd (1.9mtpa), Byco Refineries of 155,000bpd (7mtpa) output capacity, which was commissioned in June 2015.