Attock Refinery announces 8-day closure on fuel oil glut

KARACHI: Attock Refinery Limited (ARL) on Tuesday announced a temporarily shut down of its main unit due to low demand of furnace oil in the country.

“ARL is temporarily shutting down its main distillation unit for approximately eight days,” ARL announced in a communication sent to the Pakistan Stock Exchange (PSX).

Local refineries have been grappling with high furnace oil stocks as thermal power plants were not collecting stocks due to low demand of electricity in the winter.

Last week, Pakistan Refinery Limited (PRL) had announced a shutdown due to the same reason, despite the directives issued by the Oil and Gas Regulatory Authority (OGRA) to keep the refinery operational to meet the domestic needs of diesel and petrol in the country. ARL would be the second refinery to shut down on account of high furnace oil stocks within two weeks.

ARL told shareholders that due to ullage constraints resulting from low furnace oil demand, the refinery was temporarily shutting down its main distillation unit for at least eight days. During this period some necessary maintenance jobs would be carried out.

ARL said that the refinery would be operating at a capacity of 35 percent as a result of this shut down. However, adequate inventories of products were available to meet the current requirements (of petroleum products, oil and lubricants).

“This has been intimated to Ministry of Energy (Petroleum Division and OGRA,” ARL said. The accumulation of furnace oil stocks in winter has become an issue for the local refineries as power plants stop the stockpiling of fuel oil on account of lower electricity demand.

Upon the demand of refineries, the government held a meeting on furnace oil stocks, but the Power Division did not agree to lift the fuel as it did not fall on the merit list for power generation. Under the government policy, power should be produced from the available cheap sources first, and then other sources such as furnace oil, which costs more, would be used for electricity generation.

Presently, there is 524,000 tonnes of furnace oil stock in the country. Oil marketing companies (OMCs) have 176,000 tonnes of the fuel oil, 165,000 tonnes sits in power sector stocks, while refineries hold 183,000 tonnes of the commodity. The breakup of stock in local refineries showed that 38,000 tonnes was in stock with ARL, 26,000 tonnes with PRL, 12,000 tonnes National Refinery Limited, 28,000 tonnes Byco, and 78,000 tonnes sits in PARCO stocks.

Out of 78,000 tonnes furnace oil stocks of PARCO, 40,000 tonnes was at the refinery, whereas 38,000 tonnes has been transported to a storage in Karachi, for which the refinery has been exploring the option of export.