Energy Crisis May Strike Gdp Growth If We Neglect Future Energy Needs

Oct 22 - 28, 2007

Wasi Khan primarily is a Chemical Engineer and carries many distinctions to his distinguished professional career spread over 25 years in the Pakistan Petroleum industry.

Before joining Bosicor, Wasi Khan was associated with National Refinery Limited. He was in charge of overseeing all technical and operational matters at NRL. He had been associated with NRL since 1980 and had actively participated in various revamps and upgrades undertaken at the Fuel and Lube refineries. He joined BPL as President and Chief Executive Officer on October 03, 2005.

Talking to Pakistan & Gulf Economist, Wasi Khan a thorough professional discussed various issues to Pakistan's energy sector and expressed his expert opinion to meet fast growing future energy needs of the country besides operations of Bosicor.

He said that Bosicor has already completed its three years of operations and by the end of November 2007 will complete is ongoing revamping process for capacity enhancement. Actually, Bosicor Pakistan Limited ("BPL" or "Bosicor" or "Company") was incorporated on 9th January 1995 as Arkchon Petroleum Limited. The company was set up under the Government of Pakistan Petroleum Policy 1997 and is the fifth refinery in the country. It was granted the Certificate for Commencement of Business on March 13, 1995. In April 1996, the name of the company was changed to Bosicor Pakistan Ltd. The company is currently listed on Karachi & Lahore Stock Exchanges.

Originally, the company had acquired a 30,000 bpd oil refinery originally owned and operated by Tesoro Petroleum Corporation Inc. at Carrizo Springs, Texas USA. Bosicor purchased the refinery and shifted it to District Hub, Lasbella, Balochistan. The Ministry of Petroleum and Natural Resources in March 2002 has also granted the Company a Marketing License for the establishment of Oil Marketing Company.


Wasi Khan with a sense of achievement said that Bosicor is the only refinery in Pakistan, which has been granted a direct marketing licence for opening marketing outlets at selective points in the country. At present 85-86 are in the pipeline and in various stages of completion. When pointed out that other refineries have also established their outlets in the country, he corrected the situation by stating that rest of the refineries are in marketing business in affiliation with other companies, while Bosicor will be in the marketing business on its own without any affiliation with any other company and that is the difference between Bosicor and rest of the refineries, he said. The Ministry of Petroleum and Natural Resources in March 2002 has also granted the Company a Marketing License for the establishment of an Oil Marketing Company. Currently, 4 outlets are in operation and by the end of the current financial year in 2008 Bosicor has a plan to put at least 50 outlets in commercial operation at various selective points.

Another feather, which the Bosicor is poised to add to its cap, is to have the largest refining capacity after putting a newly acquired refining plant of 115,000 bpd acquired from UK. That newly acquired refinery will be installed by 2010, which will be the biggest refinery in the country he said with great confidence. When his attention was drawn towards Parco's forthcoming refinery with a capacity of 300,000 bpd, he said without any pause that Parco's refinery would come into operation after Bosicor so would be the first to bring that refinery so far the largest in Pakistan. Currently, the plant is being dismantled for relocation alongside our existing refinery in Hub Balochistan. The cost of the newly acquired refinery of 11500bpd project is estimated at Rs30 billion. He said that Bosicor site is spread over 600 acres of land at the coastal area of Hub. Currently 100 acres are being used while the forthcoming refinery would be established on another 100 acres


First of all we will enhance our capacity after de-bottle-necking to achieve the designed capacity i.e. 30,000 bpd. We are also enhancing our storage capacity to 125000 tons besides installation of Single Point Mooring in the deep sea.


While discussing current picture of energy resources, especially refinery capacity of the country, which he said is over 11 million tons as against the demand of 18 million tons, Wasi khan said that in his opinion the current demand and supply situation justifies for setting up more refineries in the country. Besides looking for new energy resources not necessarily from indigenous resources but may be arranged from outside of the country. He cited the example of IPI gas pipeline project and other sources which he feels should be given due consideration. The current deficit in demand and supply and of course the growing demand of energy on the back of economic growth and GDP growth rate is exceeding 7 per cent in Pakistan, calls for serious efforts to find new energy resources to avoid any sort of energy crisis in future. The outlook for refining sector is extremely positive and calls for capacity enhancement in general, Wasi Khan remarked.


In fact, the company had acquired a 30,000 barrels per day (bpd) oil refinery originally owned and operated by Tesoro Petroleum Corporation Inc. at Carrizo Springs, Texas USA. Bosicor purchased the refinery and shifted it at District Hub, Lasbella, Balochistan.

Bosicor started commercial production in August 2005 at optimum production capacity of 18,000 bpd, with a complete range of its petroleum products after completion of trial run of the plant, which started in November 2003 and continued till June 2004 with 8,000 bpd. Although the maximum capacity is 30,000 bpd, certain problems restricted its operation to 18,000 bpd. Nevertheless, in order to enhance its production capacity and improve its operational efficiency, BPL had undertaken an expansion and revamp program under which it carried out a revamp study with the consultation of United Oil Products (UOP) to enhance crude oil processing capacity up to 30,000 bpd. The process design was completed by UOP, which had cleared the existing plant's capability for the desired revamp capacity with certain modifications. Work on detailed engineering was commenced in October 2005 and LC for the machinery was opened during February 2006. The project is planned to be commissioned and operational by Third Quarter 2007.


In addition to the revamp, BPL's management is planning the following new projects:

To increase the storage capacity by 126,000 tons enabling BPL to save storage cost paid to PSO, FOTCO charges to FOTCO, inland transportation costs of crude oil, losses in oil inland road transit, take advantage of volatility in oil prices and to have sufficient capacity to meet HUBCO requirements and the additional requirements for unloading the biggest vessel of Crude Oil arising from the installation of Single Buoy Mooring ("SBM").

Laying of pipeline for the SBM. BPL has been considering setting up a floating port, (SBM) to unload crude fuel oil. However, another company which is planning to set up a refinery close to BPL, Coastal Refinery Limited ("CRL") already has approvals in place from relevant authorities for the setting up of a floating port. BPL has reached an agreement with CRL whereby BPL will be using the port facility for agreed upon consideration and at the same time CRL will be paying for using BPL pipeline/terminal from where the crude oil will be transported to CRL. The proposed arrangement will entail saving on account of FOTCO charges, major freight cost and inland transportation losses to BPL Installation of an Isomerization plant for the conversion of Naptha into Motor Spirit ("MS") in order to earn higher margins. The Isomerization will be procured (relocated) from UK. Bosicor, realizing the future revenue potential is planning to set up an Isomerization Plant of UOP technology to upgrade Light Naphtha to increase the production of Motor Gasoline pool RON for export to Iran.

The Isomerization Unit, which BPL is acquiring, is a Penax-Molex process and has the flexible feedstock processing capabilities from 5,000 - 12,500 BPD that will allow BPL to cater its present volume of Naphtha as well as future production.


BPL will have competitive advantage over other refineries as it will be the only refinery having an Isomerization Plant for the conversion of its Naphtha to MS. Not only will it utilize the company's Naphtha production but will also buy Naphtha being produced by other refineries which is currently being exported. Moreover, the SBM and the storage tanks will enable Bosicor to take advantage of the volatile oil prices and store large quantities of oil.