Refinery at Khushalgarh on the cards

ISLAMABAD: Khyber Refinery Limited (KRL) has planned to invest $500 million to construct a refinery with the capacity of 20,000 barrels per day at Khushalgarh, Khyber Pakhtunkhwa (KP), by June 2020.

“We have already invested around $150 million on this project and now got license from regulator Oil and Gas Regulatory Authority (OGRA) this month after which the pace of construction will get momentum in months ahead. We will complete this project by June 2020 with the plan to invest approximately $500 million. It will be the first refinery in Pakistan for getting Euro-4 standards of fuel first time in the country’s history”, KRL Chairman Zafar Sheikh told The News in an interview on Saturday.

He said KRL had invested in different projects around the globe, including the US and China, and more investment could be brought in to the country after making this project successful.

He said that KRL procured 20,000 kanals of land and intended to procure 30,000 kanals more to increase the refinery's capacity from 20,000 barrels per day to 40,000 per day in the second phase. “We will provide 5,000 direct and 50,000 to 100,000 indirect jobs with the help of this project,” he added.

He said ther refinery would also produce jet fuel to meet the demand of the defence sector

The refinery of modular construction, he said, would utilise the latest technology of US firm Honeywell-UOP. The low pressure and temperature operation would benefit from low operating costs, making the small refinery feasible.

The 20,000 barrels per day refinery, being modular in concept, could be increased in size as and when KRL decides, he maintained.

The initial investment is around $500 million, but could be doubled for the foreseen expansion. KP oil production does not currently justify that scale of investment.

The refinery is designed to process local crude oil grades currently produced at the Nashpa, Makori, Chanda and Mela fields in KP, but has enough flexibility to handle a broad range of oil grades.

He said the refinery would be capable of producing Euro 4 standard diesel and 92-95 RON gasoline. These have less than one-tenth of the dangerous sulphur content typically found in Pakistan fuels, he added.

He said that their dedicated engineering office in Bucharest, Romania completed over 50 percent of the detailed engineering. It is now being used by a fabrication facility in Dubai to procure materials and start production of over 60 percent of the refinery vessels. Now that the OGRA construction licence was awarded, KRL could begin on-site construction in earnest.

He said that KRL had some concerns about the policy announced by the last government to encourage the establishment of refineries in the country. Certain incentives favoured the establishment of large refineries in the coastal region. This would appear to discriminate against the up-country refineries such as KRL. These concessions should be available to all new refineries approved by Ogra, he said.

“The policy is unfair and discriminatory in nature. It discriminates against us on the basis of scale – we are small so as to cater for the available production in KP," Sheikh said.

"It discriminates against us on the basis of location – when actually we are saving the government a huge amount by putting less strain on the Inland Freight Equalization Mechanism and reducing the wear and tear and human risks associated with tankers constantly plying the highways transporting crude to the south and petrol and diesel back to the north,” he said.