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March 27, 2020

Massive dip in POL products use after lockdown

National

March 27, 2020

ISLAMABAD: The government has imposed ban on import of motor gasoline (petrol) and crude oil from April 2020 onward and directed all oil marketing companies (OMCs) to lift the petroleum products from the local refineries as demand of POL products has drastically gone down in the wake of lockdown in whole Pakistan including AJK and Gilgit-Baltistan to limit the outbreak of coronavirus.

The refineries have also been asked not to import crude oil as well. This has been asked by Petroleum Division in a letter to Oil Companies Advisory Council (OCAC) advising it to ask the OMCs and refineries not to import petrol and crude oil from April onward.

Following the massive dip in demand of petroleum products on account of countrywide lockdown, three plants of Attock Refinery Limited (ARL) are already closed and one plant is operational. Pak-Arab Refinery Company (Parco) is totally shutdown for the last one month because of installment of new plants and was scheduled to soon be operational but in the wake of massive reduction in POL consumption, it is not certain that it will run or not and if yes, it may not be operational fully.

Meanwhile, National Refinery Limited (NRL) has temporarily shut down its operations and to this effect, NRL has communicated its decision to Pakistan State Oil (PSO).

The closure of refineries are feared to expose the oilfields to huge damages because of not lifting of crude oil from the local fields and the supply of other products of gas and LPG from the wells are feared to be jeopardized. And to ward off the looming dangers hovering on refineries that have increased manifold after the emergence of COVID-19 outbreak, a video meeting of top management of ARL was held here on Wednesday, which was attended by Energy Minister Omar Ayub Khan, Special Assistant to PM on Petroleum Nadeem Babar and Secretary Petroleum Asad Hayaddin and the government functionaries decided to provide relief to ARL by banning OMCs from importing petrol and crude oil and directing them to lift maximum products from ARL to cater to Potohar region, KP and Northern Areas as it is the ARL, which uses the local crude to refine and produce the finished petroleum products.

When contacted, M Adil Khattak, Chief Executive Officer of Attock Refinery Limited (ARL) said that the government has assured that all OMCs will not import motor gasoline from April 2020 onward and lift the petroleum products from ARL.

He said that his refinery is at present running 50 percent of its production capacity, which also sometime fluctuates downwards and if the OMCs start using the petroleum products of ARL, then the refinery production activities will increase.

However, the letter of Petroleum Division written to OCAC of which copy is exclusively available with The News says, “Consumption of motor gasoline has dropped significantly due to enforcement of lockdowns by provincial governments to control spread of COVID-19. As OMCs have sufficient inventory of the products therefore all OMCs or requested to cancel their planned imports (April 2020 onwards) and increase their off take from refineries so that operations of refineries are maintained at an adequate level.

Further, all OMCs are advised to finalise or update their commercial agreements with local refineries for required products sourcing. Refineries may facilitate OMCs in this regard. And similarly in order to ensure smooth operations of explorations and productions companies, refineries are also directed to cancel their crude imports.

Meanwhile, National Refinery in a letter to PSO of which copy is in possession with The News told under section 96 of the securities Act, 2015 and clause 5.5.1 (a)of PSX Regulations conveyed saying that in view of decision of provincial governments to lock down to contain the COVID-19 outbreak resulting in extremely low demand for petroleum products, the company has decided to temporarily close down all of its production with effect from March 25, 2020 as it carries sufficient inventories to meet the current requirements. The decision will also help in reduction of exposure of its employees to the pandemic. The situation will be reviewed during first week of April, 2020 for restart of refinery.