ISLAMABAD: With changing political landscape in the Middle East, Pakistan’s refining industry is expecting discounted crude oil imports from Iran once its successful talks with the United States on nuclear programme lead to removal of international trade sanctions.
Asad Siddiqui, the chief financial officer of Byco Refinery, told a news conference that refineries in Pakistan would have no specification problems in refining Iranian crude.
He said Tehran was expected to offer discounts on crude sale to open up and get a foothold in the oil export market.
He said Byco Refinery with largest installed refining capacity in the country was poised to take advantage of expected Iranian discounts unlike the country’s other refineries which had long-term crude supply contracts.
He said most of the refineries had supply contracts of around one year.He said perhaps Iran would also offer discounts on crude oil to open up its market and it would be good for Pakistan.
He said Byco had completed one of the two new projects for isomerisation and desulphurisation and it had relatively short-term crude supply agreements that provide flexibility for Iranian crude.
He said Byco also had past experience of refining Iranian crude before its supply had to be suspended due to international sanctions.
Byco’s refining capacity has now increased to 155,000 barrels per day (bpd) after completion of its second unit of 120,000 bpd.
Previously, Parco had the largest refining capacity of 90,000 bpd, followed by 68,000 bpd of National Refinery, 48,000 bpd of Pakistan Refinery Limited and 45,000 bpd of Attock Refinery.
He said because of its consolidation of business model, the company would be declaring profit for the first time for the quarter ending June 30 that would set the direction for its improved financial position in future.
He said the Byco management had decided to consolidate its refining business before going into expansion of retail outlets. The focus of marketing has been on furnace oil sales and we have been able to secure furnace oil business from Nishat Chunian, K-Electric, Tapal, Liberty and Hub Power Company.
He said Byco was facing problems because of the issue of turnover tax but explained that authorities had not only understood the tax anomaly but was committed to issue an enabling clarification.
He explained that the refinery was set up under tax-holiday for seven years when there was no turnover tax which was imposed subsequently and the government had agreed to do away with it.
He said about 95pc of the oil pricing was based on crude price which meant that turnover tax could simply eat away the entire profitability.
He said the completion of its isomerisation and de-sulpherisation plants in a couple of months would convert its entire naphtha production into motor spirit that would almost double its production from 12,500 bpd to cut costs.
The 2018 Boao Forum for Asia (BFA) annual conference is scheduled for April 8 to 11 in Boao, Hainan Province. The forum will be themed "An Open and Innovative Asia for a World of Greater Prosperity."
— The Daily Mail - People's Daily