There Is A Worldwide Shortage Of Refining Capacity

Oct 22 - 28, 2007

In the wake of international inclination towards setting up of oil exploration base and oil refineries in offshore and on shore locations in Pakistan the venture once dubbed as unprofitable has turned out to be a lucrative one.

World over there is a shortage of refineries. Historically, it was considered as unprofitable business. But, now the trend is being shifted across the globe. For instance, Saudi Arabia is building refinery having capacity to process 400,000 barrels per day. Identically, in Pakistan four new refineries are coming into operation in near future. With these developments on national and international scenes, there are emerging up some equivalently considerable options requiring utmost attention of principal stakeholders of the industry. High scale engineering equipments along with the spacious locations are highly needed for establishing especially on shore oil refinery plants. Secondly, the refinery musters up prominently high skilled workforces who are supposed to be saddled with the contemporary technologies. Since, dismantling, re-erection processes are few of the most subtle steps for setting up an oil refinery plant. That, nation lacks of high skilled labor force, is the line on which we should work on. So that, we can build on a sustainable economy in which importing knowledge than labor across the border characterizes the economical structure. In an interview with the PAGE, Chairman Indus Refinery Limited, Muhammed Sohail Shamsi highlights these and other operational subtleties of oil refinery operation in Pakistan.

Though, IRL has not yet embarked on a formal oil refinery operation its history in Pakistan dates back to year 2003 when IRL started shipping Petro Canada's machineries into Pakistan in order to set up an oil refinery plant. While 65 percent of equipments have been shifted in, IRL plans to begin its full fledged operation by March 2009.When asked for the reason behind the much-awaited time period, Chairman IRL promptly stated that it would take pretty much eight year to build an operational oil refinery due to the sophistication of engineering works involved. Once kicked start, IRL plans to process crude of 100,000 barrels per day. So far, it has invested 250 million US dollars in Pakistan and directly employed around 220 people. Alongside, the fully operational unit will have a permanent vacancy for 630 employees. In phase-II extension, not only the capacity would be increased to 130,000 barrels per day but 5,000 to 6,000 contractual and permanent jobs be announced. IRL has the advantage of refining higher sulphur crude. The technology, IRL equipped with, will, eventually allow them to process the kind of crude, which most of the refineries avoid.

IRL's refinery site is located near Port Qasim on the Main National Highway, Karachi approximately 21 kilometers from FOTCO oil terminal and jetty and 2.5 kilometers from Ghaghar Phatak.

Having completed his high school in Karachi, he flied off to US to continue his further studies. He was there for about six years. He was in oil and gas business since about seven years. Before that he was into trading of CNG and allied industries. Shamsi was born in a business family and naturally joined father's business of import and export for two years. To refurnish his businessman skills and mosaic experiences, he has also been into auto parts and construction businesses.

Talking about his bon journo, apparently culminated in the oil and gas refinery sector, he said to have gone to the US for negotiating prospective partners who had interest to begin fuel refinery operation in Pakistan. In US, Pakistan American Business Community Organization supported him morally to coordinate with same-mind business groups.

The charming loads of potentials in terms of natural resources specifically in oil and gas sector in Pakistan brought him to the business. Sharing his experience in abroad, he related, when he met few of the top brass of this sector they were eagerly looking for the permission from government of Pakistan to come to Balochistan for exploration activities. He noted with admiration their knowledge about natural resources reserves in our region more so in Sindh and Balochistan.

We have the second largest copper reserves in the world. Additionally, we have the fourth largest reserves of coal in the world. Ironically, only 0.5 percent has been explored so far. Although, the sulfur contents are high, but we need to have plants to plain that coal and utilize nation's natural bonanza. Sustainable supply of water is needed to clean the coals. In US 54 percent of energy needs are being fulfilled from coal. India uses 4 to 5 percent. China uses 34 percent. Coal can not substitute energy required for public transports. However, power generation can effectively be taken place through utilizing coal. This will slash the substantial import bill of furnace oil. Moreover, the taxes government put on fuel import, would eventually be cut down. Subsequently, the masses get benefited economically.

In a response to CO2 emissions and climate change situation, Shamsi said, Government of Pakistan has moved a SRO calling for reduction of sulphur content to 0.25 percent by year 2013. Currently, government allows one percent sulphur content in diesel. IRL is going to produce 0.48 percent, he claimed. None of the refineries agreed on government formula year rather we insisted to rise the period by 2016. By that year the quantity has hopefully been cut down to zero percent.

Last year Pakistan imported 4.5 million tons of furnace oil, 4.5 million tons of diesel. This shows consistent trade deficit in balance of payment. In gasoline we are meeting our requirement. We are putting our line to get added advantage of exporting surplus gasoline. We are already working on that if gasoline demands become less than the supply nationwide then exporting surplus would turn out to be competitive option for the nation.

At present, involved in on-shore refinery, IRL is going to produce quality gasoline, which would have better aromatic content and lower benzene content. He said, "our gasoline would be better than what presently available in the market. Since, it would be at par with the Canada's standards." IRL is bringing modifications to its Fuel Catalytic Converters (FFC) units, being introduced first time in Pakistan, to give better quality gasoline to local consumption. With collaboration of England and US partners, they ended up buying Petro Canada unit having capacity of producing 100,000 barrels per day. It was the top twenty five running refineries in North America.

Shamsi while informing about strategic operation of IRL said that they would go to130 barrels per day in a second phase. As the by products out of crude oil refining, diesel, furnace oil, kerosene, jet fuel, asphalt, and LPG are extracted. IRL plans to produce asphalt to meet exponential needs of the nation. We will have to import products for refining. Since whatever produced in the country is supplied to other five refineries operating in Pakistan. IRL is canvassing for its quota. In other case, following the trend we will have to import from Middle East. We are working with three different oil production companies in this regard. Until ministry of petroleum assigns us certain quota, we have to import, he reiterated at last.