KARACHI: Refineries have started to comply with Euro-V criteria, maximize the output of gasoline and diesel, and minimize the production of furnace oil (FO) in the wake of the upgrading strategy.
Refineries should be able to boost overall production of gasoline (99%) and diesel (47%) thanks to the upgrading scheme. Furnace oil production is anticipated to decrease by 78%, according to a study conducted by Arif Habib Ltd. on refinery modernization.
Refineries have already started feasibility studies for independent upgrades, and the government, with assistance from the sector, has developed a policy for refinery upgrades.
The research states that Pakistan’s average annual need for petroleum products over the past five years is 24 million tonnes, of which 11.35 million tonnes have been produced domestically and the remaining 12.90 million tonnes have been imported.
Pakistan has a 20 million tonne capacity, but it is unable to use it all because of a change in the power sector’s energy mix and a decline in the demand for furnace oil. Refineries cannot drastically alter their production slate, which results in a decrease in throughput.
Aware of the broader circumstances, the government on August 17, 2023, issued a program for the upgrading of brownfield refineries, which was later modified in February.
According to the article, refineries who support the strategy will get seven years of additional tariff protection or deemed duty incentives, or 10 percent for gasoline (motor spirit) and 2.5 percent for diesel.
Pak-Arab Refinery Ltd (Parco), Attock Refinery Ltd (ATRL), National Refinery Ltd (NRL), Pakistan Refinery Ltd (PRL), and Cnergyico Pk Ltd (CNERGY) are the five oil refining businesses in Pakistan.
Five refineries will need to sign the policy before the overall capacity for gasoline and diesel can reach 21,251 and 31,288 tonnes per day, respectively. According to the paper, there is an aim to decrease furnace oil production by 78 percent, or 3,414 tonnes per day.
Furnace oil consumption is falling as a result of the recent three to four years’ change in the nation’s energy mix and decreased offtakes from power producing businesses. Refineries decreased their overall output as a result, which decreased utilization.
The policy permits import gasoline and diesel to be subject to a minimum customs tariff of 10% for a period of seven years following the date on which the policy is amended.