ISLAMABAD: Byco Petroleum has started physical work on up-gradation plant of its refinery to convert furnace into Euro-5/6 petrol and diesel and plans to establish two more Single Point Mooring (SPMs) over the next couple of years.

Byco Petroleum Pakistan Ltd (BPPL), which has now been rebranded as Cinergyco Pk Ltd after the replacement of Abraaj as fund manager of Infrastructure & Growth Capital Fund (IGCF), recently has held the groundbreaking of the “Upgrade-1” project recently, BPPL’s chairman Muhammad Wasi Khan told a group of journalists.

Pakistan’s fuel mix has evolved rapidly in the past four years. Till mid-2017, furnace oil or fuel oil was the main feedstock for power plants. This was switched to LNG in October 2017 by the then government ahead of application of IMO-2020 that banned high sulfur furnace oil as bunker fuel with effect from January last year. Suddenly hydro-skimming refineries had no market left for fuel oil and no avenues for export.

A byproduct of making gasoline, diesel and other outputs of hydro-skimming, furnace oil was even exported by Byco in January 2020 to lessen financial losses incurred on it. The plant will clean the diesel and gasoline down to 10ppm of Sulphur to comply with Euro-5/6 standards.

“We have started civil work and delivery of equipment has also been initiated,” he said, adding that as per schedule, Byco has commenced civil works for the installation of Diesel Hydro Desulphurising (DHDS) and Fluid Catalytic Cracking (FCC) unit. The addition of the DHDS and FCC facilities will enable Byco to produce Euro-5/6 compliant diesel and gasoline in Pakistan as per the government’s directive.

The upgrade will enable Byco to reduce production of low value furnace oil and enhance output of high quality products, making them better for the environment as well as more valuable for our business and thereby will boost Byco’s profitability.

Byco refinery is operating at 60pc capacity due to higher production of furnace oil. With conversion plant, its capacity utilisation would reach 100pc.

Responding to a question on new oil refining policy finalised by the government, Mr Khan welcomed the initiative but added that the government should also encourage relocation of used refineries as a better business model as it was difficult for the government to spare funds for $5-10bn worth of brand new refineries. He said large refineries have not come up despite many plans as returns on such large investments were not very attractive.

He said that proposed refinery was good so far as refineries are concerned which are operating now in negative margins due to lower prices of refined products. He urged the government to approve incentives for up-gradation plants. Mr Khan said that Byco’s upgrade project and conversion plant would be completed in 2024.

‘We considered that global oil industry will seek peak time in 2030 but it has witnessed its peak time now, he said, adding that it has started to go down now following other energy resources. The oil prices stood at $100 per barrel before pandemic but it hardly touched $70 per barrel now.

Published in Dawn, April 17th, 2021