Interview with Mr Zafar Iqbal — Chairman, SAI Group
PAGE: Kindly tell us something about yourself?
Zafar Iqbal:Â I am Chairman SAI Group/SAI Institute of Studies. SAI Institute of studies, affiliate of Cornell University USA, authorized to offer Cornell University Courses & Certificates.
Besides, I have been associated with oil and gas sector for more than fifty years. I am Founder President Defence Residents Society, Founder President Small & Medium Enterprises Alliance, Founder of Bazme Kiran and President- Society for Promotion of Arabic. I have traveled to 22 countries and attended hundreds of seminars.
PAGE: Are refineries underutilized in Pakistan?
Zafar Iqbal:Â Pakistan has 6 refining companies in the country operating. Installed refining capacity and productions provided below.
| Refinery | Million Tonnes Per Annum (MTPA) | Barrels per day (BPD) | Total Refinery Production (MTPA) 2020-21 | |
|---|---|---|---|---|
| 1 | Attock Refinery Limited (ARL) | 2.4 | 53,400 | 1.78 (15%) |
| 2 | Cnergyico Pk Limited (formerly Byco Petroleum Pakistan Limited) | 7.2 | 155,000 | 1.79 (16%) |
| 3 | ENAR Petroleum Refining Facility (ENAR I and ENER II) | 0.3 | 7,500 | 0.31 (3%) |
| 4 | National Refinery Limited (NRL) | 3.1 | 70,000 | 1.80 (16%) |
| 5 | Pak-Arab Refinery Limited (PARCO) | 5.3 | 120,000 | 4.42 (39%) |
| 6 | Pakistan Refinery Limited (PRL) | 2.1 | 47,110 | 1.24 (11%) |
| TOTAL INSTALLED | 20.4 | 453,010 | 11.34 (100%) |
Refineries have installed capacity to produce more. Their production is limited by various factors. Amongst them the technical factor is the production of furnace oil by the refineries. Furnace oil has no or little use after converting power plants to gas/LNG. Built up of furnace oil stocks without outlet compels the refineries to turn-down production. Further upgrading of refineries to better and low sulphur fuel specs would allow refineries to run at optimum their capacities.
PAGE: Would the output of petrol and diesel spike if refineries are modernized?
Zafar Iqbal:Â Refinery modernization can have many aspects. Typically it includes replacing older equipment with new technologies designed to remove bottlenecks in the refinery’s physical facilities and improve its energy efficiency, making the operations safer with improved environmental emissions standards. It also provides the flexibility to refine wider blends of feed stocks leading to a better match between production and demand. It provides capability to process crude oils containing higher levels of sulfur while producing better quality fuels with lower environmental emissions hazard.
Petrol and diesel output may not necessary spike due to refinery modernization unless de-bottlenecking of critical process equipment is done with the objective to increase output. However, even otherwise some increase in production could be seen due to process and equipment efficiency improvements.
PAGE: What is your standpoint on 6 refineries in Pakistan (in terms of capacity/ability to modernize)?
Zafar Iqbal: Apart from PARCO’s Mid-Country refinery in Mehmood Kot, the country’s other refineries are hydro-skimming units. These refineries have undergone much needed upgrading in recent years with the installation of Isomerization units and Diesel Hydro Desulphurization (DHDS) plant. The upgrades have enabled the refineries to produce a higher yield of EURO-II compliant Diesel and motor gasoline.
PRL, for doubling its refining capacity has signed an agreement of $1.2 billion with a FEED study contractor for refinery expansion and upgrade, from hydro skimming to deep conversion which will reduce production of High Sulphur containing fuels.
ARL is evaluating upgrading projects for installation of a Continuous Catalyst Regeneration Reforming Unit and revamp of existing Isomerization and SR Reformer to further improve quality and production of fuels. After these projects ARL would have the ability to produce Euro-V grade fuels.
NRL has periodically undertaken two upgrading projects for crude distillation units to increase capacity.
PARCO’s refinery at Mehmood Kot is already the country’s most modern refinery. It can produce lead free gasoline of 90 Octane rating fuel oil with low sulphur content, meeting the international standards.
Cnergyico has plans to upgrade the refinery by installing cracker to break furnace oil into higher grade fuels. The project is stalled due to financial reasons.
PAGE: Are more refineries needed for Pakistan? What role could they play for the economy?
Zafar Iqbal:Â Crude oil local production and import figures are provided below.
| Year | Local Production (Million Tonnes) | Import (Million Tonnes) |
|---|---|---|
| 2015-16 | 2.963 | 7.723 |
| 2016-17 | 2.887 | 6.887 |
| 2017-18 | 2.887 | 6.736 |
| 2018-19 | 3.521 | 9.186 |
| 2019-20 | 3.098 | 6.980 |
| 2020-21 | 3.258 | 8.676 |
It is seen from above that the import is gradually increasing to meet growing demand while local production increasing in year 2018-19 has stayed steady since then due to some small oil fields coming online. Significant increase in local production is unlikely soon therefore the country would remain dependent upon growing imports.
| Petroleum Products Import | ||
|---|---|---|
| Year | Local Production (Million Tonnes) | Import (Million Tonnes) |
| 2015-16 | 11.700 | 13.656 |
| 2016-17 | 12.068 | 15.512 |
| 2017-18 | 13.638 | 14.323 |
| 2018-19 | 12.394 | 8.766 |
| 2019-20 | 9.858 | 8.100 |
| 2020-21 | 11.140 | 10.117 |
Refineries in Pakistan are in need of further modernizing to improve efficiency and fuel quality having low sulphur content. Cracking units required to convert furnace oil to high quality fuels. Additional refineries should be installed for crude processing locally to produce fuels instead of importing fuels.
The industry is striving for a conducive Refining Policy for providing reasonable incentives and margins for enabling them the make further investments. Reportedly, the Petroleum Division is working closely with the industry to formulate a policy to induce investments in this sector. This would have a positive effect on the country’s economy by producing jobs, removing dependency upon imported fuels and focusing only on importing crude oil, as well as exporting fuel products after meeting domestic demand.
Refineries and their dates of set up are as under:
- Oldest Refinery is Attack Refinery in Attock 1922.
- Pakistan Refinery Karachi in 1960
- National Refinery in 1963.
- Pak Arab Refinery in 1974 put up with partnership of Govt. of Abu Dhabi.
- Byco Refinery was set up in 1995 and now new name is Cnergyico Pak Ltd.
Oil refineries have very highly qualified technically qualified experienced engineers and management for operation.
Due to pathetic poor current-economic conditions, there is no ray of hope that very large amounts of dollars will be made available for investment and development.