CHAPTER No.13

Pakistan is one of the importing countries of crude oil and refined oil products because our crude oil reservoirs do not full fills our requirements. So, much of the petroleum products including "aviation fuels" are imported from various countries such as Kuwait, Saudi Arabia, Iran, Neither land, Germany, Australia, Dubai etc.

The total production capacity of crude oil in the year 1998-99 is 17,76059 BBL and in the year 1999-2000 is 17,7605 BBL, but is still not meeting our annual demand.

13.1 SUPPLY PATTERN IN PAKISTAN:

Presently, three domestic refineries and Dhodak topping plant supply refined petroleum products.

The three domestic refineries are:

1. National Refinery limited , NRL
2. Pakistan Refinery limited, PRL
3. Attock Refinery limited, ARL

The crude oil processed by these refineries is a blend of imported and local crude. ARL, located near Rawalpindi has a capacity of 1.55 million tons per annum and processes local crude oils only from the northern region. The refining capacities of these refineries are given in table 13.1 below.

Today a new gross-root refinery, PARCO with a crude oil processing capacity of 4.50 million tons per annum is being set up at Mahmood Kot near Multan. This refinery has started its production from September, 2000. The PARCO mid-country refinery project, after its full scale production, will enhance country’s oil refining capacity by 60 percent, to 11 million tones per annum.

At present, Kuwait is meeting Pakistan’s 75% HSD and Kerosene needs while Saudi Arabia fulfils half of the over all fuel requirements of the country.

The 1998-99 production rate of aviation fuel of the three domestic refineries and Dhodak topping plant is shown in table – 13. 2 .
 
 

Since the aviation fuel produced in Pakistan by various refining industries does not fulfil our requirements therefore, to meet the requirements aviation fuel is imported from some other countries. The detail for the year 1998-99 and 1999-2000 as provided by the "Federal Bureau of statistics" is given below in table – 13. 3.
 
 

• M.T. = Matric Ton

The annual production of Jet fuels (blends) for the year 1998-99 and 1999-2000 is shown in table-13. 5.

13.2 FUTURE DEMAND:

Demand for petroleum product is expected to grow at an average of about 8-9% annually. Correspondingly, the total requirement of petroleum products will increase from 16.0 million in 1996-97 to about 30.0 million tons in the year 2006-07. By product, gasoline is expected to grow at about 3.0% annually. At this rate, the current demand of about 1.35 million tons is projected to climb up to a level of 2.0 million tons in 2006-07. Kerosene / JP-1 pool is estimated to grow around 2% annually.

13.3 FUTURE PERSPECTIVE:

Pakistan being part of the global village, cannot remain without influence from international happenings. Consequently, owing to a crash of product prices in the international market and certain unrealistic financial and product pricing aspects of the Import Parity Pricing Formula, the domestic refineries are faced with a dismal profitability situation. Moreover, the domestic refineries, equipped with some basic processing hardware only, are in close proximity to the Middle East and therefore, will always have to compete with cheap import of refined products from the large vertically integrated oil producing companies. The Middle Eastern oil producing/refining companies determine even, the product premiums included in the Import Parity Formula for existing refineries. These companies, because of vertical integration can perhaps survive low premiums but the economics of our refineries is adversely disturbed. Thus, due to a continuing depressive state of global refining business and capital intensive nature of capacity additions, investment in the refining sector is considered unattractive excepting for strategic reasons or as crude outlets for large oil producers.

In the Pakistan context, this situation can only be reversed if we are able to strike new and substantial indigenous reserves of gas and /or oil. Thus robust and enhanced efforts are required to exploit the existing energy resources to build a strong indigenous exploration and production base. These efforts should be directed at achieving cost effectiveness, reduction in import dependence, promotion of self reliance through accelerated exploration of energy resources and minimum environmental degradation.

Today, in the backdrop of insufficient indigenous oil reserves, widening deficit in demand for refined products and fast saturating infrastructure/port facilities. The question is should Pakistan work to:

• Add new refining capacity, or
• Develop infrastructure/port facilities and continue to import refined products.

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