Friday June 14, 2024

Byco Refinery to convert FO into petrol, diesel by 2024

By Khalid Mustafa
April 17, 2021

HUB, Balochistan: In a welcoming development, the Byco Refinery has taken the lead in initiating the process to install an upgraded plant in its vicinity aiming to convert furnace oil (FO) by 2024 into petrol and diesel at par with standards of Euro-5/6.

And this is how the refinery, with the capacity to convert crude oil of 155,000 barrels per day into POL products, will be having the capacity to refine the crude oil of 200,000 BPD.

Top notches of various departments of the refinery told this to a select group of journalists from Islamabad here at Hub. The journalists were not only shown various important facilities of the refinery and briefed about their working, they were also taken to the central control room from where the whole functions of various important plants are controlled while refining the crude oil into different petroleum, oil and lubricants.

“Under the upgrade plan, Byco has already commenced civil works for the installation of our DHDS and FCC units. The addition of DHDS and FCC facilities to our refining complex will enable Byco to produce Euro 5/ Euro 6 compliant diesel and gasoline in Pakistan as per the government’s directives.” The said facilities are being relocated from the UK and will be installed after 100pc refurbishment with the same configuration at which these were established in the UK.

“This will enable Byco to reduce production of low value Furnace Oil and enhance our products quality, making them better for the environment as well as more valuable for our business and thereby will boost Byco’s profitability.”

The journalists also visited the zero point — the area from where the functions of Single Point Mooring are regulated. The refinery has the honour to install the SPM (Single Point Mooring — the first-ever facility in Pakistan where huge vessels are anchored and discharge the crude oil that reaches the Byco Refinery through 15 kilometers pipeline. The major portion of 11.5-kilometer pipeline is laid down deep in the sea and 3.3 kilometers is on shore.

The technical team also stated that Byco Refinery has also worked out the business plan under which SPM-II and SPM-III will also be installed. It handles 12 million metric tons per year oil imports. The Keamari Port and FOTCO handles nine million tons per year of oil each. Byco SPM also handled crude oil cargoes of over 100,000 metric tons.

In January this year, the technical experts of the refinery said Byco Petroleum Pakistan Limited conducted the groundbreaking on a historic project named “Upgrade-1”.

Pakistan’s fuel mix has evolved rapidly in the past four years. Till mid-2017, furnace oil or fuel oil was the main feedstock for power plants. This was switched overnight to LNG in October 2017 by the government order. Suddenly, hydro-skimming refineries had no market left for fuel oil, and were at pains to store it. Furnace oil was even exported by Byco in January 2020 to scale down financial losses. The new plants will clean the diesel and gasoline down to 10 ppm of sulphur to comply with EURO-5/6 standards.

Byco has started civil work and delivery of equipment has also been initiated, Mohammad Wasi Khan, Chairman, Byco’s Petroleum Pakistan Limited, later stated in Karachi head-office. He pitched his arguments in pursuit of relocation policy when it comes to setting up refineries and their upgrading, saying in a country like Pakistan with less investment, the production of POL products can be achieved at par with the standards of products of new state of the art refineries.

To a question, Khan said that Abraaj Group is no longer part of Byco Refinery. Abraaj was earlier acting as Fund Manager of the funds of 27-28 shareholders. After Abraaj was liquidated, it was no more the fund manager.

Mentioning the new refinery policy, he said the government is currently working on a new oil refinery policy that offers incentives for existing upgrading of projects and new refineries as well. He said that the refinery policy approved by Shahid Khan Abbasi, the-then petroleum minister, was good, but it lacked the incentives required during the transition period till the upgrade, which has been covered in the draft policy prepared by ex-Special Assistant to PM on Petroleum Nadeem Babar. He also urged the government to approve incentives for upgrading of plants.

“We considered that the global oil industry will witness peak time in 2030 but it is witnessing its peak time now,” he said, adding that it has started to go down now following other energy resources. The oil prices stood at $100 per barrel before the pandemic but it hardly touched $70 per barrel mark now.

Talking about increasing the footprint of electric vehicles not only at the international horizon but also at national level, he said that the use of motor gasoline will be phased out in the years to come and the refineries’ business will be limited to production of jet fuel, petrochemical and lubricants. “Heavy vehicles will continue using oil as it would be difficult for them to operate on electricity.”

About oil consumption growth in Pakistan, he said that the oil industry had earlier predicted 30 million tons but it stood at 20-22 million tons, which was below the projections as the growth in the country, which generates the demand for POL products, has gone down.

He said that the market of furnace oil had ended now and ships after enforcement of IMO-2020 are not using furnace oil as fuel. However, there will be no immediate phase out of jet fuel and petrochemical. He further said that hydrogen will largely remain.

Mentioning about the deregulators of oil prices, Khan said that at present, there are controlled regulation in oil prices. The oil industry had to follow the import parity price of Pakistan State Oil (PSO), which now has been changed to PLATTS price. At present, the prices of refined products are lower compared to crude oil with a difference of $2 to $6 that has put the refineries in negative margins. Khan said that the government should come out of the business of regulating oil prices. He proposed to deregulate the oil prices. However, he said that the regulator should keep strict vigilance to this effect.

Khan said that SPM was the largest oil import handling facility in deep sea owing to which the demurrages charges are zero whereas customers on other ports have to pay multi-million dollars in the head of demurrages.

He said that Byco also planned to set up additional SPM 2 and SPM 3. At present, Byco refinery is operating at 60 per cent due to higher production of furnace oil. With a conversion plant, the production of refinery would go up to 100 per cent.