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Thursday April 18, 2024

PRL set to sign supplemental OGRA agreement to boost refining capacity

By Tanveer Malik
April 03, 2024
A representational image showing an oil refinery. — AFP/File
A representational image showing an oil refinery. — AFP/File

KARACHI: Pakistan Refinery Limited (PRL) said on Tuesday that it would sign a supplemental agreement with the Oil and Gas Regulatory Authority (OGRA) shortly, which will pave the way for transformative upgrades and expansions within the company.

“This agreement will pave the way for a transformative upgrade and expansion project that will double PRL’s refining capacity from 50,000 barrels per day (bpd) to 100,000 bpd,” the PRL said in a statement.

“Crucially, the project will also enable PRL to produce EURO V standard fuel, which will save the company billions of rupees annually in penalties for non-compliance with environmental regulations.” These agreements followed the inking of a deal with the regulator to access

incentives outlined in the new refinery policy.

As PRL was the first refinery to have signed the upgrade agreement with OGRA in November last year, it is now going to sign a supplemental agreement with OGRA after the government amended the Brownfield Refinery policy, which required the supplemental agreement.

The sources in the refining sector said that other refineries have also finalized their draft upgrade agreements and shared them with OGRA, except for one refinery. They said that the upgrade agreements would be signed soon, which would pave the way for a huge investment in the refining sector.

PRL, being prominent as it was the first refinery to sign the upgrade agreement, is now ready to sign the supplemental accord with OGRA.

“The upcoming signing of the supplemental agreement will significantly enhance the incentives offered in the amended brownfield policy approved in February 2024, highlighting PRL’s proactive approach to regulatory compliance and its determination to capitalize on the incentives outlined in the new refinery policy," the company said in a statement.

Building on its successful performance, PRL achieved and surpassed production targets for the second quarter of 2023-24, demonstrating a significant improvement in its production mix and setting new industry standards.

This outstanding achievement reinforces PRL’s dedication to operational excellence and its readiness to tackle future challenges.

Notably, in September 2023, PRL attained unprecedented sales milestones, with diesel sales reaching a record-breaking 82,000 tons. This accomplishment underscores the effectiveness of PRL’s strategic decisions and operational efficiency. Moreover, the conversion of Naphtha into Motor Spirit (MS) significantly contributed to revenue growth, with over 26,000 tons of MS 92 produced during the period.

Despite economic challenges and low local demand for furnace oil, PRL’s financial performance remains robust. The company recorded a second-quarter financial close at 2.0 billion after the record profit of 4.5 billion in the first quarter of this year. The six-month profit stands at 6.5 billion, marking the fourth consecutive year of profit for PRL, which includes the highest ever profit of 12.5 billion in 2022. PRL’s commitment to maximizing production efficiency and revenue, even in challenging market conditions, is evident in its strategic choices, as stated.