Refinery warns of shutdown

Complains to regulator OMCs are reluctant to buy oil stocks due to heavy imports

ISLAMABAD:

Attock Refinery Limited (ARL) has warned Oil and Gas Regulatory Authority (Ogra) of going for a complete shutdown during the upcoming week due to refusal of oil marketing companies (OMCs) to lift oil stocks due to heavy imports.

In an urgent letter written to Ogra Chairman Masroor Khan on Thursday, ARL Chief Executive Officer Adil Khattak drew attention towards the high stocks of petroleum products that were going to force the refinery towards a complete shutdown.

“The country is already facing a crisis of foreign exchange. In such a situation, OMCs have imported a high volume of petroleum products and are selling them in the area of ARL,” Khattak said.

Sources said that the situation had created a serious crisis for ARL due to the reluctance of OMCs to lift the petroleum products.

ARL operates on local crude and if it goes for a shutdown, it will also affect the operations of local oil and gas exploration companies like Oil and Gas Development Company Limited (OGDCL). This can also result in a gas crisis which has also happened in the past, sources said.

According to the official policy, the government allows OMCs to import petroleum products. However, the OMCs have imported petroleum products in bulk which are going to result in the shutdown of ARL.

ARL has already shut down one unit and is now operating at 65% capacity due to high stocks that have caused storage issues.

The refinery management has also warned that oil supply to armed forces and Islamabad airport may also be suspended if the issue of oil stocks is not resolved.

Earlier, the management of ARL had sent an email to Ogra on August 16, 2022 about possible shutdown of the refinery due to low lifting of stocks of petroleum products by the OMCs.

“As requested earlier, low lifting of petroleum products, especially HSD (high-speed diesel) have resulted in accumulation of high stocks of petroleum products,” Khattak said in the letter.

He also explained that “to manage the ullage situation and avoid complete refinery shutdown, we had earlier temporarily shut down one of our crude distillation units and now have further reduced our refinery throughput”.

“Resultantly, we are now operating at a bare minimum throughput of 65% of our capacity. We are afraid, if the dispatch pattern persists, complete refinery shutdown now appears imminent by the coming weekend,” he added.

Khattak reiterated that ARL is a deficit supply zone for both HSD and PMG (premier motor gasoline), hence their products should be prioritised for lifting by the OMCs before moving any volumes “in our supply envelope”.

“We request your support and immediate directions to OMCs for taking maximum supplies of HSD and PMG from ARL to sustain the refinery operations, failing which complete disruption of the entire crude oil supply chain including gas supplies from the local oil fields cannot be ruled out,” Khattak said.

He requested for urgent intervention of Ogra chairman in this critical matter.

Published in The Express Tribune, August 19^th, 2022.

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