Expansion continues: Byco sponsors inject $25 million to help finish refinery
Company remains committed to opening largest such facility in Pakistan.
KARACHI:
Byco Oil Pakistan has recently received a $25 million injection of equity into the company by its majority shareholders in a bid by the sponsors to help the integrated oil company to complete its refinery expansion project.
A company spokesperson explained the injection of the capital in the context of Byco’s overall expansion plans, which include setting up a petrochemical manufacturing facility – a project that requires the new, expanded refinery to be up and running before it can begin production.
“Byco has already imported the plant for petrochemical manufacturing, which is why it makes it more urgent for the company to get the refinery up and running,” Atiq Malik, the head of corporate communications at the company told The Express Tribune.
Byco currently operates the smallest of four refineries in the country, with a total production capacity of 35,000 barrels per day. The new refinery, based just outside Karachi, would add about 120,000 barrels per day to the company’s capacity to refine crude oil and would be the single largest such facility in Pakistan, overtaking the Pak-Arab Refinery Company’s (Parco) Multan-based refinery which can handle 100,000 barrels of crude oil per day.
A critical difference between the new refinery and others is its ability to directly import oil via a single point mooring project (SPM) – an open sea anchorage with sub-sea and sub soil pipelines connecting it to the on-shore facilities.
In a statement released to the press on Thursday, Byco claimed that the new refinery is 94% complete. But Malik admitted that the company was running a little behind schedule. “We had been expecting the project to be completed by the end of 2011 but we now expect it to be finished by the second quarter of 2012,” he said.
The latest investment by Byco’s two main shareholders – Abraaj Capital, a Dubai-based private equity firm, and Byco Busient – brings the total amount of capital invested by the two firms to about $430 million. “This huge investment in a challenging economic scenario reflects the sponsors confidence and optimism in the country’s ability to turnaround its economy in the near future,” said the company in its press statement.
Byco began as Bosicor in 1995 and is the smallest publically listed refinery in Pakistan. Abraaj bought a 40% stake in the company in March 2008 for a price that does not appear to have been disclosed. The investment was made from Abraaj’s $2 billion Infrastructure and Growth Capital Fund, the same vehicle through which the buy-out house bought a stake in the Karachi Electric Supply Company.
Abraaj decided to continue with the previous management’s strategy of expanding the business vertically, into such downstream activities as both oil marketing and petrochemical manufacturing, a plan of action that had first been decided upon in 2006.
The decision appears to have been based largely as a means to overcome regulatory risk in a market where the government has an overbearing degree of control over pricing. It is possible that Byco was looking at the successful example of the Attock Group, currently the only fully-integrated oil company in Pakistan that spans refining and oil marketing and has minimal exposure to the overall energy sector’s financial problems.
As a result, Byco (the name given to the company in 2010) has started its own oil marketing company that currently operates 213 retail outlets across the country. It is also in the process of setting up what it claims is Pakistan’s first petrochemical manufacturing complex with an initial capacity of 27,300 barrel per day to produce aromatics such as raffinate, C-9, benzene, mixed xylene, para-xylene, and ortho-xylene.
Published in The Express Tribune, November 18th, 2011.
Byco Oil Pakistan has recently received a $25 million injection of equity into the company by its majority shareholders in a bid by the sponsors to help the integrated oil company to complete its refinery expansion project.
A company spokesperson explained the injection of the capital in the context of Byco’s overall expansion plans, which include setting up a petrochemical manufacturing facility – a project that requires the new, expanded refinery to be up and running before it can begin production.
“Byco has already imported the plant for petrochemical manufacturing, which is why it makes it more urgent for the company to get the refinery up and running,” Atiq Malik, the head of corporate communications at the company told The Express Tribune.
Byco currently operates the smallest of four refineries in the country, with a total production capacity of 35,000 barrels per day. The new refinery, based just outside Karachi, would add about 120,000 barrels per day to the company’s capacity to refine crude oil and would be the single largest such facility in Pakistan, overtaking the Pak-Arab Refinery Company’s (Parco) Multan-based refinery which can handle 100,000 barrels of crude oil per day.
A critical difference between the new refinery and others is its ability to directly import oil via a single point mooring project (SPM) – an open sea anchorage with sub-sea and sub soil pipelines connecting it to the on-shore facilities.
In a statement released to the press on Thursday, Byco claimed that the new refinery is 94% complete. But Malik admitted that the company was running a little behind schedule. “We had been expecting the project to be completed by the end of 2011 but we now expect it to be finished by the second quarter of 2012,” he said.
The latest investment by Byco’s two main shareholders – Abraaj Capital, a Dubai-based private equity firm, and Byco Busient – brings the total amount of capital invested by the two firms to about $430 million. “This huge investment in a challenging economic scenario reflects the sponsors confidence and optimism in the country’s ability to turnaround its economy in the near future,” said the company in its press statement.
Byco began as Bosicor in 1995 and is the smallest publically listed refinery in Pakistan. Abraaj bought a 40% stake in the company in March 2008 for a price that does not appear to have been disclosed. The investment was made from Abraaj’s $2 billion Infrastructure and Growth Capital Fund, the same vehicle through which the buy-out house bought a stake in the Karachi Electric Supply Company.
Abraaj decided to continue with the previous management’s strategy of expanding the business vertically, into such downstream activities as both oil marketing and petrochemical manufacturing, a plan of action that had first been decided upon in 2006.
The decision appears to have been based largely as a means to overcome regulatory risk in a market where the government has an overbearing degree of control over pricing. It is possible that Byco was looking at the successful example of the Attock Group, currently the only fully-integrated oil company in Pakistan that spans refining and oil marketing and has minimal exposure to the overall energy sector’s financial problems.
As a result, Byco (the name given to the company in 2010) has started its own oil marketing company that currently operates 213 retail outlets across the country. It is also in the process of setting up what it claims is Pakistan’s first petrochemical manufacturing complex with an initial capacity of 27,300 barrel per day to produce aromatics such as raffinate, C-9, benzene, mixed xylene, para-xylene, and ortho-xylene.
Published in The Express Tribune, November 18th, 2011.