PRL announces $1.2b up-gradation, expansion projects

Aftab Ahmed

Pakistan Refinery Limited (PRL) on Tuesday announced to invest US$ 1.2 billion to undertake Refinery Expansion and Upgrade Project (REUP).

In a notice sent to Stock Exchange, PRL management that it had decided to undertake Refinery Expansion and Upgrade Project (REUP).

It had two objectives to achieve under expansion and upgradation project. It will comply to produce EURO V compliant High-Speed Diesel (HSD) and Motor Spirit (MS/Petrol).

Under this plan, it will also expand crude processing capacity to 100,000 barrels per day. Its current capacity to produce petroleum products is 30,000 barrels per day.

It will also upgrade from Hydro-skimming Refinery to Deep Conversion Refinery. This will significantly help reduce production of High Sulphur Furnace Oil (HSFO).

In a statement, PRL said that it will undertake the Front-End Engineering Design (FEED) study of REUP.

It plans to appoint the Financial Advisor, with the successful bidder that is likely to be in place by quarter ending March 31, 2022.

The management has estimated cost of Project at around USD 1.2 billion based on Detailed Feasibility Study.

However, it will be able to determine actual cost of the project after the completion of the FEED study.

It will follow financial close and award of Engineering Procurement & Construction (EPC) contract.

Earlier, the board of director had met on March 30, 2021 and discussed business strategy.

The implementation of business strategy is linked to the approval of the new proposed Pakistan oil refinery policy that offers several tax exemptions for up-gradation projects.

Under a business strategy, the oil refinery will install the up-gradation projects in Pakistan which also included the HSFO plant to convert it into other by-products.

Under a plan, the production of diesel and petrol will increase. The HSFO production will decline from 35 to 5 per cent.

It included up-gradation by converting Fuel Oil into MS and HSD, to improve profitability and import substitution and maximize return on investment, and making it self-sustainable.

https://newztodays.com/refineries-request-for-deferring-up-gradation/

In 2016 refinery undertook a detailed feasibility study for an expansion and up-gradation of the oil in Pakistan. The main objectives of the study were to generate solutions and alternatives for Regulatory compliance with regards to

Following up-gradation, import substitution of refined petroleum products and light crude will result in a saving of USD 180 – 200 million per annum in the first phase without any expansion. The current refinery site has 100 acres of unutilized land to accommodate the project.

Current Project Status

In the light of discussions in the Sub Group on Oil and Gas Working Group on Energy in November 2019, the petroleum division had directed that Pakistan refinery will pursue Up-gradation Projects on a ‘Business to Business’ basis and will present for further necessary approvals under CPEC.

Since then, oil Refinery has been in contact with prospective Chinese Companies who are keen on EPC contracts in Pakistan. However, the two sides have made no progress on the up-gradation project despite that it is maintaining contact with prospective Chinese companies to re-engage as soon as the current situation normalizes.

However, PRL plans to set up up-gradation projects following incentives the government offers in the new proposed oil refinery policy. This means that oil refineries will be able to set up plants even without a joint venture with Chinese companies.