PRL to double capacity, produce propylene in $1.7 billion upgrade

KARACHI: Pakistan Refinery Limited (PRL) plans to double its crude oil refining capacity and produce propylene, a petrochemical used in plastics, in a $1.7 billion expansion and upgrade project over the next five years, its top executives said on Friday.

The project, dubbed REUP, will increase PRL’s refining capacity from 50,000 barrels per day (bpd) to 100,000 bpd and eliminate the production of high sulphur furnace oil (HSFO), a low-value and polluting fuel, PRL’s chief executive officer Zahid Mir said.

"The REUP will cost $1.7 billion with the production of propylene, for the first time by any refinery in the country," Mir said at an event to spell out the features of the refinery upgradation project.

To attract a huge investment of $1.7 billion in the next five years, Mir termed it challenging in the present conditions and revealed that the refinery has asked the State Bank of Pakistan to allow it to retain export proceeds of fuel oil, which are to the tune of $200 million annually.

"Fuel oil is a real problem as it is a highly negative margin product," he said and pointed out that due to more production of FO, the refinery could not produce Euro specification products and the refinery had to pay Rs25 billion in penalties to the government for not producing these products.

Mir said the refinery would be able to produce propylene product after upgradation and it would be the first refinery to produce this product and its export is estimated to fetch $175 million dollars annually.

About the production of high speed diesel and MS after upgradation, Mir said that the refinery would be producing 35 percent MS of the total production, which is currently nine percent and the share of HSD would go up to 45 percent from the existing 28 percent.

"Our journey towards doubling capacity is not just about numbers; it is about laying the foundation for a self-sufficient and sustainable energy future for Pakistan and invited banking partners to become integral parts of our journey," he added.

Earlier, Tariq Kirmani, chairman of the board of directors of PRL said PRL was the first refinery to embrace the Brownfield Refinery Policy.

This policy, approved by the Federal Cabinet on August 8, 2023, aligns perfectly with PRL's vision, and works to our advantage.

"The government is to be complemented on providing the long awaited and much required investment focused refining policy. With an estimated investment of USD 4-5 billion in Pakistan’s refining sector, this policy encourages existing refineries to upgrade and expand, minimizing production of High Sulphur Residue Furnace Oil and producing environment friendly fuels with Euro-V specifications, thus adhering to the government’s environmental goal of producing cleaner fuels," Kirmani said.

He noted that the advantages of the Brownfield policy are immense, positioning all existing refineries on a trajectory to upgrade, collectively capable of refining around 450,000 barrels per day of crude oil.

Kirmani said that the lack of development and technology upgrades over the years has placed PRL slightly behind the rest of the refining industry. "Recognizing the need for a transformative change, we are poised to address these challenges."