Staff Report
ISLAMABAD:
Energy Ministry has informed Cabinet Committee on Energy (CCoE) that Byco Petroleum had collected Rs 38 billion on account of deemed duty while it had Rs 53 billion on account of capital expenditure investment and commitments for plant up-gradation.
Ministry of Energy (Petroleum Division), during the course of previous meeting of CCoE, had submitted details regarding the collection of deemed duty by the refineries and their investment in upgrading plants during p CCoE.
Petroleum Division while briefing the CCoE informed that Byco Petroleum has invested more in capital expenditure among all other refineries and also committed investment of Rs 53 billion worthy amount to upgrade their refinery.
Byco Petroleum Pakistan Limited is one of the country’s refineries that are operating to process crude oil to produce finished products locally.
Petroleum division said that oil refineries of Pakistan had collected Rs 237 billion on account of deemed duty. However, they had invested Rs 200 billion to upgrade petroleum products.
This refinery is located in the Hub area of Balochistan. It has the first single-point Moring Facility in the country to pump crude oil through the offshore pipeline.
It has a shareholding of different investors. IGCF Oil and Gas Ltd is known as Abraaj Mauritius announced to offload 22 % shares in Byco Petroleum Pakistan Ltd.
Byco Petroleum has sold a major chunk of 523 million shares. Following this deal, the byco petroleum share price had touched the Rs 13 mark. However, it has touched Rs 8 per share now following uncertainty on Pakistan’s new oil refinery Policy 2021.
As per details, Pakistan Refinery Limited (PRL) is another refinery that is operating in Pakistan to process crude refining to produce finished products. This refinery had collected Rs 36 billion on account of deemed duty. However, the petroleum division said that the amount on account of capital expenditure investment and commitments stood at Rs 17 billion.
Similarly, National Refinery Limited (NRL) had collected Rs 40 billion on account of deemed duty. However, it figured out Rs 37 billion on account of capital expenditure investment and commitments for the up-gradation of petroleum products.
Attock Refinery Limited (ARL) is also operating that process locally produced crude oil refining in the country.
The major oil and gas explorers like OGDCL, PPL, and MOL produce crude oil. This refinery processes crude oil in the country.
Pak Arab Refinery Limited (PARCO) is a joint venture between the government of Pakistan and Abu Dhabi. This is the largest oil refinery with over 100,000 barrels per day refining capacity. It had collected Rs 76 billion on account of deemed duty under the existing refinery policy. However, it had the amount of Rs 60 billion on account of capital expenditure investment commitments.
This refinery is also working to set up another refinery in the coastal area of Balochistan.
Expansion Plan of Byco Petroleum
Byco has laid out an expansion plan. Crude oil processing is decade long business in the world. It has been the first source of energy supply by refining products around the world.
Middle East countries, especially and Kuwait, have refineries that process crude oil. They have also been importing petroleum products across the globe.
Being a major supplier of oil supplies, it also controls the prices of oil in the future. Saudi Arabia has been shaking the entire energy market due to enhancing supplies or placing a curb on crude oil production.
As Middle East countries have a long history of diplomatic relations, Saudi Arabia and the United Arab Emirates (UAE) have also been maintaining footprints in the oil market in Pakistan.
Pakistan has five oil refineries that are refining petroleum products to meet the needs of the country. They include Byco Refinery, Pak Arab Refinery Limited (Parco), National Refinery Limited (NRL), Attock Refinery Limited (ARL), and Pakistan Refinery Limited (PRL).
Byco Petroleum
Byco Petroleum is the first refinery in Pakistan to process 150,000 barrels per day of crude oil. It has set up a Single Point Mooring (SPM), a floating liquid port in the deep sea for crude oil shipments.
SPM has a capacity to handling 12 million metric tons per year of crude oil imports which are higher, compared to the Kemari port and Fotco, which handle 9 million tons per year of oil each.
Expansion Plan
Byco has laid out plans to expand the refining capacity from the existing 150,000 barrels per day to 200,000 barrels per day. At present, it is operating at 60 percent crude oil refining capacity due to a higher production of furnace oil.
Pakistani power sector market has been shifted to LNG fuel from furnace oil. This has resulted in reducing furnace oil consumption due to its higher price, putting pressure on refineries in Pakistan to place a cut on processing crude oil.
Pakistan has major LNG supplies deal with Qatar, and therefore, Saudi Arabia had lost its oil market in Pakistan to some extent.
Following oil prices crash amid the Covid-19 pandemic, the prices of LNG in Pakistan also dropped. LNG prices in Pakistan are still cheaper, compared to the prices of furnace oil and high-speed diesel. These two fuels have been traditional fuels in the power sector.
This situation has created competition in the energy market in Pakistan, forcing the oil refineries to upgrade. Keeping in view the situation, Byco has started work to set up a conversion plant of furnace oil that would produce byproducts like petrol and high-speed diesel.
It will commence operations in 2024 to process crude oil. This will also help a refinery to operate at 100 percent against 60 percent.
Retail outlets Expansion
Byco claims to be a market leader at present which had focused on retail outlets since 2007. It has built a network of over 400 retail pump stations. With plans to expand the existing refinery to 200,000 barrels per day, it also plans to expand retail outlets to capture the market.
At present, Pakistan State Oil (PSO) holds a major chunk of the market. However, it will have more retail outlets following enhanced production of petroleum products after commissioning of furnace oil conversion plant as well. In this regard, it had negotiated a deal to acquire Puma Energy.
Expansion of Single Point Mooring (SPM)
Byco is the first largest refinery in the country that has set up a Single Point Mooring (SPM), a floating liquid port in the deep sea for crude oil shipments.
It has the capacity to handle oil cargo ships carrying 100,000 metric tons of oil. However, other ports like the Kemari port and Fotco can handle ships loaded with 65000 metric tons of oil.
It plans to set up two more Single Point Mooring (SPM)-SPM 2 and 3 in the future. SPM has zero penalties and therefore, it hopes that other refineries will use this facility to handle crude oil imports.
New Byco Partners to invest
An Oil and Gas Ltd that was previously known as Abraaj Mauritius holds 37 percent shares in Byco Petroleum Pakistan Ltd. Byco has now planned to exit Pakistan and announces divesting 22 percent shares. It has already offloaded a major chunk of shares on the stock market.
It has signed an agreement with AKD Group to offer shares to local and international investors.
AKD group also plans to buy 7 percent shares in Byco Petroleum that will attract other investors to become partners. This will not only be a good signal for it would bring new investment to execute expansion plants it has laid out to capture more market share.
