ENHANCEMENT OF REFINING CAPACITY AT A SLOW PACE

SHAMIM AHMED RIZVI, Islamabad
Oct 22 - 28, 2007

The refinery component of the oil sector seems to under neglect of the government, as there has been no increase in the number of refineries operating in the country since the year 2000. Nor there has been any significant improvement in their capacity.

According to sources in Ministry of Petroleum and Natural Resources, the number of refineries in operation in Pakistan is six and their operational capacity has increased by 2.7 percent since 2000-01 as is evident from the following chart.

REFINING CAPACITIES AS 30TH JUNE

Unit: Million Tonnes/year

REFINERY

2001

2002

2003

2004

2005

2006

 

Attock Refinery

1.66

1.66

1.66

1.66

1.80

1.82

-

Bosicor Refinery

-

-

-

1.50

1.50

1.50

-

Dhodak Refinery

0.12

0.12

0.12

0.12

0.12

0.12

-

ENAR Petrotech Refinery

-

-

-

-

-

0.13

-

National Refinery

2.80

2.90

2.80

2.80

2.70

2.71

-

Pak Arab Refinery

4.50

4.50

4.50

4.50

4.50

4.50

-

Pakistan Refinery

2.20

2.10

2.25

2.15

2.20

2.10

-

Total

11.28

11.28

11.33

12.73

12.82

12.88

2.7%increase

It was in November last year that the Economic Coordination Committee of the Cabinet (ECC) approved a new refinery project to be built in Hub area at a cost of $ 5 billion with financial cooperation of International Petroleum Investment Company of UAE. The proposed refinery to be set up at Khalifa Point near Hub would have a refining capacity of two to three hundred thousand barrels a day. This export-oriented project would be operative by 2010. Presently the crude oil production in Pakistan ranges between 65 to 66 thousand barrels a day. Ten companies are engaged in this task at 112 points (Sindh 83, Punjab 24, NWFP and Balochistan2) in the country. The total production of these companies from 57763 barrel per day in 2000 to 65577 barrels as in evident from the following chart. (Untapped off shore oil reserves in Pakistan are estimated at 40 billion barrels).

UNIT: US BARRELS PER DAY

Operator/
Company

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

ACBR

BHP

114

566

533

1652

1713

1797

73.6

POL

8079

8914

9411

10404

10319

13078

10.1%

ENI

-

-

70

260

330

317

-

MOL

-

-

-

-

151

837

-

OGDC

21136

20392

21629

21380

31350

31511

8.3%

OPI

648

1299

1527

1846

1882

1587

19.6

OMV

-

3

9

42

98

97

-

PETRONAS

-

-

-

-

22

104

-

BP

25271

29964

27822

22366

16572

12676

-12.9%

PPL

2514

2409

3268

4036

3642

3575

7.3%

Total

57763

63548

64268

61986

66079

65577

 

The existing refineries are with holding their expansion programs as they have demanded some additional concessions and incentives from the government. The work on the new refinery project at Hub Coastal areas the biggest export oriented refinery project approved last year could not start because of the similar reason.

The Economic Coordination Committee of the Cabinet (ECC) in its meeting on last Wednesday approved the incentive package for refineries and petrochemical projects. The package includes tax holidays and reduction in import taxes on import of machinery besides exemption from certain other levies. The new package it is hoped will not only attract new investors but would accelerate the activities of capacity enhancement in the existing units.

Giving an overview of oil and gas sector, a Director General of the Ministry, Mr. G.A. Sabri told this correspondent that the primary commercial energy supplies increased by 4.2% to 57.9 million tones of oil equivalent (mtoe) during 2005-06 as compared to 55.5 mtoe in 2004-05. This growth is low as compared to the preceding two years increase by 8% and 9.2% per annum, but it is higher than the average growth during five years period before 2003-04. This decrease in growth rate may be attributed to (i) the reduced growth in natural gas production which gradually came down to 4% in 2005-06 from 21% in 2003-04 and 12% in 2004-05, (ii) lower consumption of HSD in transport sector, and (iii) sharp reduction in coal imports by Pakistan Steel. These declines have been compensated by growth in hydel generation which increased by 20.2% during 2005-06. The share of natural gas in primary energy supplies during 2005-06 reached up to 50.4% followed by oil 28.4% hydro electricity 12.7%, coal 7.0%, nuclear electricity 1.0% and LPG 0.4%.

Natural gas production during the year increased from 3685 to 3836 million cubic feet per day while oil production declined slightly to 65577 from 66079 barrels per day. However, the drilling activity showed appreciable progress, as compared to the preceding two years. During 2005-06, 33 exploratory wells were drilled as compared to 19 during 2004-05 and 29 during 2003-04. The number of development wells drilled 2005-06 was 31 as against 28 during 2004-05 and 24 during 2003-04. The drilling efforts resulted in 8 discoveries mostly of gas/condensate, out of which, 6 were by OGDCL and 2 by the private sector companies.

Oil consumption decreased by 0.3% during 2005-06 over the preceding year. In industry and power sectors, it increased by 9%, and 22% while it decreased in transport, agriculture and domestic sectors by 10%, 42% and 33%, respectively. Consumption of furnace oil in cement industry also dropped by about 17% to 207614 tones from 250428 tones in 2004-05.

Imports of oil increased by 4.7% wile the cost of oil imports increased by 44.5% due to rising international oil prices. Import of furnace oil increased by 30.7% while that of HSD decreased by 2.7% during 2005-06. The refineries also produced less quantities of HSD in transport decreased significantly from 7.01 to 6.27 million tones, i.e. a decline of 10.6%.

Natural gas consumption increased by 5.4% during 2005-06; main quantity wise increase was in general industry (141 MMCFD) followed by transport (40), fertilizer (22), commercial (6), cement (5). Gs consumption decreased in power sector by 44 MMCFD and in domestic sector by 3 MMCFD despite the fact that number of domestic consumers increased by 6.5% over preceding year. CNG sector continued to show high growth rate of 58\9% and gas consumption increasing from 67 to 107 MMCFD.