NRL adopts technology to produce best quality diesel

KARACHI: National Refinery Limited (NRL), the second largest oil refinery in Pakistan, has completed its technology upgrading drive aimed at producing the best-quality diesel, according to a bourse filing on Wednesday.

“The plant has the potential to reduce sulphur content to as low as 10ppm (parts per million),” NRL Company Secretary Nouman Ahmed Usmani said in a notification to the Pakistan Stock Exchange (PSX).

Sulphur content in diesel causes pollution in the environment.

Pakistan has started importing 500ppm diesel in January 2017 as it heavily relies on fuel supplies from overseas markets. Earlier, it was importing outdated diesel containing 5,000ppm, which was hazardous and rarely used around the world.

Earlier, the government had asked refineries to upgrade their technology in order to produce the Euro-II standard diesel having 500ppm.

The 10ppm sulphur content means the refinery has installed the technology to produce diesel with ultra-low sulphur content, which can be called “best of the best quality” diesel.

No country around the world produces and consumes this type of diesel. The lowest sulphur content in diesel being used around the globe is 50ppm, which is being consumed by about two dozen countries.

NRL’s stock price rose 1.88%, or Rs13.46, to Rs729.76 with a volume of 169,250 shares at the PSX.

Euro-II diesel

The refinery, however, will not produce the 10ppm diesel for the time being. It has started production of Euro-II standard diesel in line with government guidelines.

“NRL’s diesel hydro desulphurisation (DHDS) and auxiliary units have successfully commenced operations. Completion of DHDS has enabled the refinery to comply with government directives and produce high-speed diesel (HSD) meeting the low sulphur (500ppm) Euro-II specifications,” Usmani added in the notification.

Petrol production

Other technological upgrading will enable the refinery to produce additional quantity of petrol (motor gasoline) from naphtha from next month.

“Naphtha isomerisation (ISOM) unit is in start-up phase where its auxiliary units (naphtha splitter and naphtha hydrotreater) have already been commissioned and the refinery will produce additional motor gasoline by mid-July 2017,” the company secretary said.

The project would help the company increase production of petrol by 192,000 tons per year, it was learnt.

This will slightly cut Pakistan’s petrol imports. The country mostly exports naphtha - a locally produced raw material for petrol - due to little availability of required technology. The refinery has production capacity of 2.71 million tons per year, including multiple grades of lube base oil.

It had set the cost of technological upgrading and expansion of petroleum projects at $349 million.

The cash-rich firm funded larger part of the upgrading and expansion projects from its own running finances. However, it acquired a debt of Rs12.1 billion in the shape of syndicated term finance for 10 years with two-year grace period.

The government had tasked local refineries to produce Euro-II standard products by December 2012. Later, the Economic Coordination Committee extended the deadline to December 2015, which was also not achieved.

The refinery has reported a net profit of Rs83.46 billion in nine months ended March 31, 2017 with earnings per share (EPS) of Rs83.46. The profit is 27% higher than the earnings made in the corresponding period of previous year.

Published in The Express Tribune, June 22^nd, 2017.

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