Pakistan Perched to Become Virtually Self-sufficient in Meeting its Petroleum Requirements

April 22, 2013

Islamabad - Pakistan’s refined oil deficit has continuously been a matter of national interest, yet the existing crude oil refining capacity of the country has been unable to meet the demands of the local market. As a result, huge volumes of motor gasoline, HSD and HSFO are imported from the Middle East although a deficit is anticipated over the short term, it is expected that this shortfall will quickly be tapered to a more manageable shortfall.

The oil refining business is on the threshold of a significant capacity boost. Byco, currently a minority contributor to the daily increasing petroleum product needs of Pakistan has positioned itself to become the single largest contributor to the sector. The company will soon be commissioning the country’s largest oil refinery with a crude oil refining capacity of 120,000 barrels per day at Byco Oil Pakistan. The numbers don’t stop there. With a 35,000 bpsd refinery already in place, Byco is set to achieve a refining capacity of 155,000 bpsd which is 55% more than the current largest refinery in the country, with a blue print in place for an unprecedented increase to 220,000 bpsd by year 2018.

Speaking at a press meet recently, Qaiser Jamal, Chief Executive Officer, Byco Oil Pakistan Limited, outlined the aims of Byco in the Petroleum and Petrochemical sector, “Oil refining and that too putting together Pakistan’s largest refinery, has been a gargantuan task. But we were prepared for all challenges and shall soon commence our next big contribution, the petrochemical complex.” With operations at full capacity, the total oil refining capacity of 155,000 bpsd equate to almost 39% - 41% of country’s total oil refining capacity, depending on the number of on-stream day factor.

The new Byco Oil Refinery recently completed a successful 72-hour performance test run at 60% of capacity. During the performance test run operation, the refinery produced on-specification petroleum products such as naphtha, kerosene, HSD and HSFO. Mr. Jamal stated, “The 72-hour trial run was the very last of all critical tests, rendering assurance to the credible integrity and operability of the process units and on-site utilities.”

The Refinery is poised to greatly enhance domestic refining capacity, increasing the current capacity of approximately 12.5 million metric tons per annum to almost 18.5 million metric tons per annum, while full throughput is expected to produce about 1.6 million tons HSFO, 2.4 million tons HSD, 1.1 million tons of MS and 0.8 million tons of LPG on an annual basis, figures much needed for Pakistan’s consistently rising energy needs. Anticipating the new 40,000 bpsd, PSO Khyber Pakhtunkhwa Refinery soon becoming operational, Pakistan will become virtually self-sufficient in meeting its petroleum requirements.

As a result, the new Byco Oil Refinery will provide substantial import substitution to the country. The deficits are expected to dramatically reduce by about 71% in HSDO, 68% in Motor Gasoline and 27% in Furnace Oil, resulting in substantial foreign savings to national exchequer.

“The new Byco Oil Refinery will also InshAllah be introducing Pakistan’s country’s first and only Isomerization Unit. This unit converts and upgrades Light Naphtha into environmentally friendly Benzene free gasoline with reduced sulphur and aromatic contents. At present, refineries in Pakistan export Naphtha which can be upgraded to gasoline by processing it through the Byco Isomerization plant which has a capacity of 12,500 bbl/day. Gasoline obtained from Isomerization, besides rendering value addition to export Naphtha, will serve as an at par substitution for imports, and greatly offsets the necessity of unnecessarily expensive imported Motor Gasoline”, said CEO BOPL, Qaiser Jamal.

Byco has invested US$600 million on the 120,000 bpsd refinery project, out of which 65% (US$ 380m) is foreign investment. The total debt borrowed by Byco for this investment is 25%, with 75% being mostly equity – A striking benchmark in a sector normally known to borrow 80% for project costs in long-term debt.

Byco has aggressively shunned the negativity surrounding investment in Pakistan. In the current economic environment where foreign investors shy away from investments in the country, Byco has achieved a project of strategic importance and national interest for the country, that too in the province of Baluchistan. Multiple benefits are being reaped through the creation of both direct and indirect jobs, and this project will save foreign exchange through value addition of products, facilitate secondary economic activities, increase county’s oil stocks by 2.0 million barrels and significantly broaden its manufacturing base industries.

“With the unremitting encouragement of the government and the Ministry of Petroleum and Natural Resources, the company has developed necessary infrastructure needs to meet the demand of the economy, and our partnering oil companies”, said Jamal. Additionally, “Byco has resourced its utilities requirements to include maintaining a 23-km access road for the last 10 years, processing its own water needs by reverse osmosis technology and using its refinery gas in place of natural gas and finally generating its own electricity for operation of plant and equipment.”

With 225 outlets across Pakistan, the Byco Petroleum Marketing Business is the one of the largest Oil Marketing Companies in the country, engaging numerous local businesses and in the process creating much needed employment for over 10,000 Pakistanis.