EXCLUSIVE INTERVIEW WITH MUHAMMAD RASHEED JUNG, MD PARCO
"LOCAL CRUDE OIL IS OF INTERNATIONALLY RECOGNIZED LIGHT QUALITY"
TARIQ AHMED SAEEDI (email@example.com)
Feb 11 - 17, 2008
The complex structure of transmitting refinery gas from producer to end consumer causes unbridled price surge. Oil marketing companies, distributors or dealers, wholesalers, and retailers form the main elements of the channel of distribution of refinery gas, which is a generic name of LPG, extracted at last during the processing of crud oil. Often consumer price is in considerable difference to ex-refinery cost of LPG. Although the average production of around 1200 metric tons per day across the nation facing difficulty to satisfy growing seasonal demand of about 1700 metric tons per day creates gap in demand and supply it seems that intermittent stopover for profit addition makes LPG product expensive for final customer. During an interview with PAGE, Managing Director Pak-Arab Refinery Limited (PARCO), Muhammad Rasheed Jung underlined the issue with rather an optimistic approach. He said according to marketing and distribution principle, weakness of one party is compensated by the other. The weakness could emanate from scarcity of capital investment or inadequate infrastructure. However, LPG quota allocation to OMCs exceeds over total production, he revealed and adding that may affect the price structure. Indeed government is subsidizing LPG sector to curtail the burden on consumers of international oil price rise. While currently international price rate of LPG is fixed at US$807 (Rs. 50,000) per metric ton, we are selling it at Rs. 39,800 that translates into ex-refinery cost of Rs. 45 to Rs. 46 per kilogram. He said the policy of de-link of local price with Saudi Amarco CP price formula has yet to be implemented. "I believe producer has no control over LPG market price, yet, OGRA can exert its regulatory authority to keep check."
PARCO-TOTAL: Referring to PARCO and Total collaboration, he said, Total-a French concern-has the marketing rights of PARCO's motor gasoline. It has 60 percent share in the company as it invested US$900 million in setting up the refinery plant. Motor gasoline is also the major export of the company. He said motor gasoline is in surplus in Pakistan but Iranian smuggled patrol and tax factor worsen the price impact on consumer. PARCO has capacity to refine about 100,000 barrels crude oil per day out of which only 4% LPG is extracted that makes a figure of around 450 metric ton per day. Our market share in nationwide total production of LPG is in between 35 to 40 percent. Because of indigenous crude oil production ranges between 20 to 25 percent the company needs to import crude oil of worth around US$1 billion so that import supplements the supply chain. Perhaps, which is why net price of LPG is subject to be determined as an average of local and import cost, he opined.
LOCAL BEST QUALITY CRUDE: Pakistan's crude oil is of internationally recognized light quality and can adequately be exploited to produce motor gasoline. At present one oil-refinery in the nation has pertinent plant designed to reproduce excessive motor gasoline out of crude oil processing. The specific heat process applied to crude oil producing naptha, motor gasoline, etc. in a final stage generates evaporation that following further process is transformed into LPG. Normally three kinds of crude oils having variable rate per barrel are processed in refineries nationwide. PARCO has the medium-crude plant designed capacity processing on a mix of Arabian Light, Murban, and Upper Zakum. The utility of crude oil is determined by the design of the refinery plant. Some crude can give better quality and quantity of naptha while other is feasible for different byproducts. To a question, he said despite LPG portability gives it a comparative advantage over CNG transportation and logistics of it require heavy investment.
Spontaneous and comprehensive responses of MD PARCO to raised queries are signs of his long-refined experience and expertise about oil and gas sector. When asked of secret behind sustaining and managing crucial conceptual and designing skills demanded within the top slot, he replied, timely decision making is the key. Unnecessary buying of million of dollars crude not only blocks precious amount but it also occupies storage capacity to no avail. We have to decide about the right time of purchasing. Under his leadership since 2005 when he was nominated as MD, dividends of PARCO to shareholders keep on increasing, he stated. He was appointed as GM operation in 1989. Muhammad Rasheed has 36 years of experience in managing and operating oil refineries, petrochemicals complexes, and cross country pipeline systems in Pakistan and abroad. He has been associated with PARCO since 1989 and has played very significant role in successful completion of the company's projects including KMK pipeline capacity expansion, MFM pipeline and WOP. He was the project coordinator and expeditor for the company's US$886 million state of the art refinery at Mehmood Kot, which was completed within budget and schedule. Prior to joining PARCO, Jung was working for ADNOC, PERAC, and National Refinery Limited. Having migrated with his family from Hyderabad Deccan, India, Rasheed Jung started his basic education in Punjab. He is proud of being Urdu-speaking and on his ancestral roots. He said knowing one's pedigree is important to revere human beings preempting risk of person falling to evildoings. He completed his high schooling in Military College, Punjab and graduation and post graduation in University of Munich. He holds the master degree in electric engineering. He is a senior member of Instruments Society of America.
FUTURE REFINERY PROJECTS: The demand deficit in petroleum products is estimated to touch 10 million tons per annum by 2011-12. To augment the current indigenous total refining capacity of crude oil significant numbers of refinery projects with local and foreign collaboration are on the anvil; one of which is Khalifa Coastal Refinery (KCR) that would be a joint partnership project between PARCO and Emirates of Abu Dhabi and established by 2011. For it, Implementation of Project Agreement has already been signed. Government of Pakistan has earmarked 1,000 acres land in Balochistan near Gaddani for the refinery, he said. This would be a gigantic project in the history of the nation having total refining capacity of 250,000 to 300,000 barrels per day. International Petroleum Investment Company, wholly owned by government of Emirates of Abu Dhabi, holding 74 percent share in the project will invest US$5 billion. He said the start up project will effect in direct employment to 1000 persons and indirect employment to 3000 persons. But, he feared if political situation is not improved the investment may be called off.