Furnace fuel glut also forces Byco Refinery to close down

ISLAMABAD: The furnace fuel glut that emerged out of bad governance of the government has aggravated the POL non-availability crisis as Byco refinery has also closed down its operations.

"The closure of the refinery has been intimated to the Energy Ministry and will start its operation once it manages to shift the stocks of the furnace oil to appropriate place for export purposes. Actually, the Byco refinery is closed for 3-4 days in the wake of ullage constraints." “We have in our storages 37,000 tons of furnace oil and there is no room left to store other POL products, which is why refineries are left with no option but to shut down operations,'' a senior official of Byco refinery told The News. He said NRL (National Refinery Limited) is also expected to shutdown its operation in the last week of current month of December.

"Pakistan Refinery Limited on December 16 shut down its refinery operation. Attock Refinery also closed down on the same date, its one unit having capacity to refine 5,000 BPD crude oil.”

When contacted, the CEO of Byco Refinery skipped the question on closure of its operation and said that he was in Dubai for a week and now in Islamabad. However, he said that Byco, like other refineries, has reduced throughput in the wake of non-upliftment of furnace oil. He said that Byco has FO stock of 37,000 tons at the moment and its management is trying to export this stock.

Industrial sources said that right now, PARCO is fully functional as it has managed to shift its stock of 40,000 tons of furnace oil at the port for export purposes and 10,000 tons will be shifted to the port within days.

Meanwhile, refineries, sources said, have issued a tender for the export of the furnace oil and let us see what bids they receive. "Certainly, refineries will also sustain huge losses in exporting furnace oil. It looks odd that the government is importing furnace oil and refineries are forced to export the same product at a loss."

According to the documents, the refineries have already sustained the losses in return on equity. The National refinery has braved the loss of 13.6 percent on its equity of Rs29.8 billion, Pak Arab refinery has faced loss of 13.6 [percent on its equity of Rs 76.4 billion, Attock refinery sustained loss of 6.4 percent on equity of Rs43.9 billion and BYCO 9.3 percent on its equity of Rs26.2 billion.

Instead of first using the furnace oil of a local refinery, the sources said, the Power Division extended an firm order to PSO for import of furnace oil of 1,20,000 tons and to this effect two furnace oil cargoes are anchored at port since November 13, 2021. Interestingly the power division has not so far unloaded the two cargoes owing to which PSO is paying per day demurrages in the range of $20,000-25000 per day.

This is the height of bad governance of energy ministry, industrial sources said, which gave firm demand from power division to PSO for import massive quantum of furnace oil, knowing the fact that refineries are rich of furnace oil and under the law of the land, POL products of local refineries are first consumed and then the rest to bridge the deficit is imported, but this time the energy ministry failed to take sane decision resulting into the massive furnace fuel oil glut in the country. “Right now the country has a stock of over 3,00,000 tons of furnace oil including the imported fuel.”

“Everyone knows that electricity demand plummets to just 10,000-11,000 MW but the power division has imported a huge quantity of furnace oil knowing the fact that local refineries have furnace oil in abundance.”

The intensity of the bad governance and casualness of the authorities in the Energy Ministry can also be gauged by the latest event that happened here on Friday. The CEOs and MDs of all refineries arrived in Islamabad to attend the meeting summoned by the Energy Ministry for further consultation of Pakistan Oil Refinery Policy 2021, but they were told that the meeting had been canceled. The top men of the refineries were further embarrassed when they were told that they were not needed to attend the meeting as the meeting is now strictly scheduled between the minister and acting secretary of petroleum division who is power division secretary.

Top sources in PSO said that owing to the FO glut in the country, refineries have reduced the production of POL products and right now the shortage of Jet Fuel has started emerging on the scene. “We get Jet Fuel from local refineries which have reduced the production of POL products including jet fuel. And our stocks are deleting fast.”

However, the PSO spokesperson said that “PSO has only one HSFO Cargo at outer anchorage and the same will be berthed in the coming week. The HSFO was imported on the firm orders of power sector keeping in view the current LNG situation. However due to delay in upliftment by the power sector, the cargo is at the outer anchorage and PSO has incurred demurrages of USD 15000/day.

Regarding Jet Fuel, initially the supplies reduced due to annual turnaround of PRL. NRL is also expected to go for annual turnaround by last week of December 2021. PSO has sufficient stocks and has planned accordingly for this shortfall by arranging one cargo of Jet Fuel each in December 2021 and January 2022.”