Refinery shutdowns may dent aviation fuel reserves

Petroleum Division asked to help run refineries at optimal capacity

ISLAMABAD:

The possibility of complete shutdown of oil refineries has raised concern that it may lead to the depletion of strategic aviation fuel reserves.

At present, Pakistan Refinery Limited (PRL) is closed whereas other refineries are running only partially as their fuel stocks are piling up due to reluctance of power producers to take furnace oil supplies.

The Petroleum Division has been asked to address the challenges faced by the refineries and help them run at optimal capacity as a complete shutdown can result in depletion of the strategic fuel reserves.

Earlier, the Power Division had made a firm commitment to Pakistan State Oil (PSO) and the oil refineries about the requirement of furnace oil by the independent power producers (IPPs).

Consequently, PSO imported two cargoes of furnace oil but the power sector later refused to procure the imported fuel from PSO and locally produced fuel from refineries, which led to the piling up of oil stocks.

A body of oil refineries and oil marketing companies, called the Oil Companies Advisory Council (OCAC), has sent several letters to the Petroleum Division, asking it to take up the matter with the Power Division.

It also warned that the accumulation of furnace oil stocks could force the shutdown of refineries.

Read Oil refineries posting negative returns

Former petroleum secretary Dr Arshad Mahmood also discussed the matter with the then Power Division secretary Ali Raza Bhutta and sought his intervention.

However, no measures have been taken so far. Now, the Power Division secretary has been appointed as the petroleum secretary following the removal of Mahmood.

However, there has been no change in the situation. It is part of an agreement with the government that the IPPs would maintain fuel stocks for 20 to 30 days of consumption.

Officials said that Attock Refinery Limited (ARL) was operating partially and its total shutdown may aggravate gas crisis in the country.

ARL runs its operations on locally produced crude oil. If it is closed, crude oil and gas producing companies like Oil and Gas Development Company (OGDC) will have to reduce supplies from fields, which may result in a reduction in gas production.

They said that the country had faced a similar situation in the past when ARL was shut down and OGDC and MOL were compelled to slash production, resulting in a gas crisis.

 

Published in The Express Tribune, December 25^th, 2021.

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