Oily matters: The curious case of the first pyrolysis gasoline import

Hascol imports consignment only to have it seized but case dropped soon enough .

KARACHI:

Hascol Petroleum Limited (HPL) has imported pyrolysis gasoline or pygas, a by-product of chemical ethylene, declaring it as standard petrol, The Express Tribune has learnt.

Pygas, which is rich in benzene, cannot be sold at fuel pumps. However, some foreign companies do use it as a blending component to go with petrol. But it has never before been imported by Pakistan, according to Pakistan Customs.

While Customs initially seized the imported chemical and pursued the matter vigorously for a few days, officials dropped the case and released the cargo without an explanation, according to court filings.

But HPL, formerly known as Hascombe, does not have a blending licence. Instead, it maintained that pyrolysis gasoline is indeed another name for motor gasoline – a statement contradictory to facts.

HPL, a relatively smaller petroleum marketer, bought 2,353.38 tons of pygas from Saudi Ethylene Polythene Company (SEPC), which has a petrochemical complex in Jubail Industrial City, the certificate of origin for the product says.

Seizing the day

The tanker M. V Songa Hawk brought the shipment to Karachi’s Keamari Terminal on August 23, 2014. The evening of the same day saw Customs seize it, citing import of an illegal petroleum product.

But by the time they entered the vessel it had discharged pygas into HPL’s four onshore tanks, which were already carrying around 16,717 tons of normal gasoline. The tanks were sealed and the vessel was barred from leaving the port.



“Something like this was being imported for the first time so we were careful. We suspected the product didn’t meet [required] specifications,” Jahanzeb Abbasi, Assistant Collector Law, told The Express Tribune.

On August 25, HPL filed a constitutional petition before the Sindh High Court (SHC) against the government, insisting that the vessel’s detention resulted in daily port charges of $25,000 and its owners were threatening to initiate legal action.

A day later, the court allowed the ship to sail against a surety of $2.3 million deposited by HPL.

Customs responds

In the subsequent days, Pakistan Customs filed its reply, contending that the imported product was pyrolysis gasoline, which had benzene content of 30% to 50%, whereas if it were motor gasoline then the government allows only a 5% limit for the cancer-causing chemical.

Customs also referred to a document, which it said, was recovered from the vessel, and further substantiates its contention. The said document is the Data Safety Sheet for Pyrolysis Oil issued by Tasnee, a large Saudi petrochemical and metals group, which owns 45% of SEPC.

It refers to three other documents recovered from the vessel that state the product was indeed pyrolysis gasoline.

HPL’s view

HPL’s lawyer Omair Nisar argued that laws such as Pakistan Petroleum (Refining, Blending and Marketing) Rules of 1971 do not restrict the company from importing pygas.

He also rejected the stance of Customs that the premier motor gasoline that could be imported must not have benzene level of over 5% as notified by the DG Oil in February 2013. He said the notice relates to the refineries and not importers.

“We are being attacked,” says HPL’s Chief Operating Officer Saleem Butt. “Our competition is scared of the fact that HPL, being a new company, has started to capture market share.”

Nisar also said the shipment was confiscated at someone’s instigation. “Customs have tried to defame my client,” he said.

Hascol, which was listed at the stock exchange earlier this year, recorded net sales Rs35.5 billion in the six months to June 2014, a 65% rise over the same period previous year.

The company is looking to increase its network to 250 retail outlets by December 2015.

But the question about pyrolysis gasoline being an importable product has been left unanswered by authorities. In the final hearing before SHC on September 5, Customs officials in consent with the HPL asked the court to dispose of the petition.

A sample of the product tested at the University of Karachi showed that the product in the four tanks carried less than 5% benzene, according to Customs lawyer. The tanks were already carrying over 16,000 tons of standard petrol and the quantity of pygas added to the tanks was only 2,213 tons.

Review of the source of the product reveals that it is impossible for pyrolysis gasoline to have low level of benzene. And it is equally impossible for what HPL has imported to be anything other than pygas.

SEPC, the manufacturers of HPL’s cargo, produces 1 million tons per annum of ethylene, according to financial statements of Sahara Petrochemicals, which owns 24% stake in the plant.

The websites of world’s largest petrochemical makers - Shell, Saudi Basic Industries Corporation and Dow Chemical Company – all say pyrolysis gasoline has at least 25% benzene.

No one from Alchemist Trading Company of Saudi Arabia, which supplied the pygas to HPL, was available for comments.

Published in The Express Tribune, September 20^th, 2014.

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