The refineries operating in the countries are showing handsome financial results

Nov 24 - Dec 07, 2003

Bosicar, is the fifth refinery in Pakistan which has recently resumed production to take the total refining capacity from existing 12 million tons a year to around 13.2 million in the refinery sector in the country.

The existing refineries including Pakistan Refinery, National Refinery, Attock Refinery and Pak Arab Refinery (PARCO) were contributing 12 million tons of oil to the POL sector in Pakistan.Pakistan's total consumption of POL products comes to around 18 million tons a year, with the induction of the 5th unit has reduced the gap between demand and supply.

The plans to set up Pak-Iran refinery having a capacity of 6 million tons seems to have been shelved, otherwise country could have become self-sufficient much earlier in the refining sector by this time. However, the Pak-Iran Refinery Project, it looks, has been shelved for reasons best known to the authorities.

Experts are of the opinion that the shift in the interest from oil based system to natural gas or other low cost fuels is one of the reasons for less attention towards the refinery sector in Pakistan. However, according to reports, state-owned Pakistan State Oil, which has gone into an agreement with Bosicar for buying its entire produce, has also plan to setup a refinery unit. If those units come, the refinery sector would have enough strength to cater to the oil needs of the country.

It may be noted that the policy to shift from costly oil to natural gas has also started showing results reflected in the gradual decline in oil consumption by sectors like power generation, transport and other oil consuming industries. Recently, there was a decline registered in oil consumption by 26 percent.

However, the refineries operating in the countries are showing handsome financial results and have become an attractive source for attracting foreign investment in this sector, as reflected in the performance of Parco. Parco, a Pakistan-Abu Dhabi joint venture had recently announced a net profit of Rs3.5 billion for the financial year 2002-03. The company approved the highest ever cash dividend of Rs1.2 billion showing a 59 percent increase over the previous year. Bonus shares, valued at Rs9.445 billion and issued during the year, raised the paid up capital to Rs11.605 billion and the share holders equity to Rs20.47 billion. The company continues to enjoy the long and short-term credit ratings of AAA and A plus for the six consecutive years.

This mid-country refinery, providing 90 RON Lead-free motor gasoline, has made a highly significant contribution to the protection of environment and improvement of public health.

The Parco completed and commissioned a crude de-canting facility at its Korangi Pumping station with a capacity of up to 17,000 barrel per day. It will encourage production and utilization of indigenous crude and thus help save precious foreign exchange.

Total-Parco, another joint venture with a French company Total, in which Parco holds 40 percent equity, continued to expand the retail network. So far this joint venture has 45 outlets all over the country and six more are in the pipeline.The SHV of Holland was also engaged in marketing the Parco's LPG under the Pearl Gas brand, has captured 15 percent of the local market.

The White Oil Pipeline Project, which is being implemented at a cost of $480 million by Parco's subsidiary, Pak-Arab Pipeline Company as a joint venture with Shell, PSO and Caltex, is also in progress according to schedule. This project is also expected to go into operation by next June in 2004 with initial throughput of 5.0 million tons per year.

Operation of the white pipeline would have diversified impacts on social and economic life of the country. This would effectively reduce the road occupancy by on national highways between Karachi and the upcountry by eliminating the involvement of thousands of oil tankers running day and night causing traffic hazards besides polluting the environment.As a matter of fact the refinery sector opens a number of openings for investment as reflected in the performance of the PARCO and other refineries.

The oil and gas sector in Pakistan has the potential to assume a leading role on the world map had this sector allowed to tap the available opportunities in the country. Although under the petroleum policy a number of exploration licenses have been issued by the government but the existing tribal system especially in the energy rich province of Balochistan was hampering the actual growth of this sector. It is unfortunate that over 80 per cent oil rich area is under force maejeure where the exploration companies are not allowed to carry out their operations.

The Mekran coast where currently Gwadar Port is being developed in collaboration with Chinese experts is likely to play a significant role in bring a rapid change in the life style of that province. The expected share in the economic prosperity to the local population is sure to bring a change in the approach of the people, the experts feel. It is the traditional tribal system which feels insecure with the development of the area. Balochistan is the least developed province of the country and that is mean reason for depriving the people of this area from the benefits of education, health and industrial development.