Attock Refinery down to 70pc capacity on furnace oil glut

KARACHI: Attock Refinery Limited (ARL) has been operating at 70 percent capacity after power plant stockpiling of low sulphur furnace oil (LSF) plummeted to zero, The News learnt on Thursday.

Although all the refineries were facing some problems in offloading furnace oil (FO), ARL’s problems increased because Kot Addu Power Company Limited (KAPC) stopped procuring LSFO from it.

“Yes we are facing the problems in upliftment of LSFO and refinery is now operating at 70 percent capacity,” Adil Khattak, Chief Executive Officer (CEO) of ARL told The News.

According to those associated with the oil industry, power demand had plunged after the arrival of winter in the north of the country, and electricity was being produced via the sufficient water in reservoirs as well as nuclear plants.

Additionally, government was preferring not to produce electricity from expensive resources like furnace oil and RLNG, which added massively in the total power generation cost otherwise. Power generation from expensive sources also meant burdening the end consumers in shape of electricity bills, something that also adds to inflation.

Petroleum Ministry has been informed that the power generation companies were not procuring furnace oil for electricity generation, oil industry officials said. “Currently, only ARL is facing problems; however, in the coming days, this issue will also hit other refineries in the country,” an official of an oil firm said.

On the other hand, Adil said that ARL produces 1,000 to 1,200 tonnes of LSFO, which was not being procured, and instead was piling up at the refinery.

It should be noted that a similar pattern was observed last winter, when the country’s refineries faced problems after power generation companies stopped procuring furnace oil. Once storage capacity had run out at the refineries, the plants had to be shut down.

Although one refinery was able to export the surplus stock of furnace oil, others had to store their stocks at the Port Qasim facility. Refineries produce furnace oil along with diesel and petrol, the production of which also gets affected negatively when furnace oil starts piling up at the refineries.

As per the upgrade projects of refineries, the production of furnace oil would be minimised, and Pakistan Refinery already has plans to bring down its production of the fuel oil to zero in the next four to five years, when its project to upgrade would be completed.