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Tuesday May 21, 2024

Cnergyico to halt refinery operations amid petroleum glut

By Our Correspondent
May 15, 2024
A representational image shows Total Energies employees walking in the Donges oil refinery in Donges, on September 8, 2023. — AFP
A representational image shows Total Energies employees walking in the Donges oil refinery in Donges, on September 8, 2023. — AFP

KARACHI: Cnergyico Private Limited (CPL) on Tuesday announced a temporarily shut down of its refinery, citing a massive buildup of high-speed diesel and petrol stocks.

"CPL is to temporarily shut down its refinery due to ullage issues pertaining to alarmingly high stocks of petroleum products, mainly HSD and petrol," the company said in a letter to the Director General of Oil, Petroleum Division.

The company highlighted that it has written a letter to the ministry to support in timely disposal of its petroleum stocks, enabling it to restart production.The refining sector has been struggling in the face of ullage issues at refineries as well as delays in the implementation of upgrade agreements.

The sector claims a one-billion-dollar loss annually due to delays in the implementation of the refining policy for the upgrading of existing refineries, which otherwise would have invested, if delays were not caused.

Adil Khattak, chairman of the Oil Companies Advisory Council (OCAC), expressed concern over the delay in the implementation of the policy for the Upgradation of Existing Refineries 2023 (Amended in February 2024).

Talking to The News, Khattak pointed out that the deadline for signing the Upgradation Agreements with OGRA was April 22, 2024.

Three refineries, namely Attock Refinery Ltd, National Refinery Ltd, and Pakistan Refinery Ltd, had given consent to sign the agreements before the deadline, and two refineries, PARCO and Cnergyico, needed more time, but the Petroleum Division didn't arrange the signing with the willing refineries nor extended the deadline in time to accommodate PARCO's request, he said.

Khattak, who is also the chief executive officer of Attock Refinery, noted that the Refining Policy has already taken more than four years in the making, causing about a four billion dollar loss to the country.

He said that ARL, NRL, and PRL planned to invest three billion dollars in their upgrade projects. "The total investment will go up to six billion dollars when PARCO and Cnergyico join in," Khattak said.

He said that the Petroleum Division has initiated a summary on May 2, 2024, to the Cabinet Committee on Energy (CCOE) for an extension of the deadline for signing the Upgradation Agreements by six months, but the CCOE meeting has yet to take place as the government seems to be more focused on attracting foreign investment, which is no doubt important, but it needs to realize that foreign investment flows in only when existing foreign and local investors are heard in this regard.