Oil, Gas and Refinery Projects update

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PRL set to start exporting furnace oil next month​

By Tanveer Malik
January 25, 2022

PRL can export FO at a rate of Rs83,000 per metric tonne in the international market and is searching for a potential buyer. -Photo file


KARACHI: Having been unable to draw local buyers even months after running into an inventory crisis, Pakistan Refinery Limited (PRL) has decided to start exporting its huge furnace oil (FO) stocks in the first week of February, if there is no improvement in demand, The News learnt on Monday.

PRL has started to shift the FO stock of 24,000 metric tonnes at the storage the company acquired on rent in Port Qasim area of Karachi. The company currently holds a stock of 24,000 metric tonnes of FO at its refinery and is making vigorous efforts to sell it locally and is ready to export it if it is not consumed by domestic Independent Power Plants (IPPs).

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PRL is the second refinery to store FO near Port Qasim for export purposes after PARCO that has already stored 58,000 metric tonnes there. “PRL has only two options; either to shut down the refinery or export FO at the discounted price to keep itself operational,” sources told The News.

According to sources, PRL can export FO at a rate of Rs83,000 per metric tonne in the international market and is searching for a potential buyer. Currently the global price of FO is Rs85,000 per metric tonne.

Sources said offering FO at discounted price would cause financial losses to the refinery; however, the price was not an issue at the moment, as disposal of FO was critical for running the refinery. Sources in the refinery sector said the FO uptake issue had not been resolved as government also told in plain words that it couldn’t do refineries any favour.

“If it is lifted by IPPs, then it is fine, otherwise the government can’t do anything in thisregard,” the sources said quoting the government, which held a meeting with the management of the refineries last week. Refineries have also offered to sell FO at discounted price but the situation has not improved for them so far. The import-parity price of FO is Rs98,000 per metric tonne but refineries have offered to sell their FO at lower levels.

The ex-refinery price of National Refinery Limited’s (NRL) FO is Rs79,000 per metric tonne, whereas ex-refinery price of Byco, PARCO, and PRL is Rs83,000 per metric tonne and Attock Refinery Limited (ARL)’s ex-refinery price is Rs93,000 per metric tonne. About the high ex-refinery price of ARL, sources point out that IPPs are lifting its FO as it uses local crude oil.
Sources said the currently local refineries have a total stock of 200,000 metric tonnes of FO and it has created problems in the operational capacity of the refineries.


Sources noted local refineries have now two option either to close down the refineries or export FO and because of it they are offering to sell it at prices lower than local as well as international market ones.

 

[ghazi52]

ISLAMABAD: Pakistan and Saudi Arabia Thursday agreed to operationalise the Saudi oil facility of $1.2 billion at the earliest.

The Financing Agreement worth $1.2 billion for import for petroleum products was signed on 29th November 2021 between the Saudi Fund for Development (SFD) and Economic Affairs Division (EAD), Pakistan. As per Financing Agreement, the SFD will extend financing facility up to $100 million per month for one-year for purchase of petroleum products on deferred payment basis.

According to the official documents available with Business Recorder, the terms of the financing includes price of purchase by SFD along with a margin of 3.80 percent per annum. The financing agreement will be initially valid for one year, which may be extended for another one year with mutual consent.

The signing of financing agreement will be followed by submission of sovereign financial guarantee from Pakistan side and opening of new Head of Account.

This will be simultaneously followed by signing of purchase contract between importer and Saudi Aramco and Saudi Aramco product trading company.

The Finance Division vide their letter dated 03-01-2022 and 04-01-2022 has furnished the sovereign financial guarantee from Pakistan side as well as Head of Account. The same has been forwarded to Saudi Fund for development and Petroleum Division vide this ministry’s letter dated 05-01-2022. It is expected that it will take one and half month to sign the purchase agreement. After singing the purchase agreement, the financing agreement will be operationalised and importers (Parco and NRL) will materialise the first shipment of crude oil/oil products.

Ambassador of the Kingdom of Saudi Arabia in Islamabad Nawaf bin Saeed Al-Malkiy called on the Federal Minister for Economic Affairs Omar Ayub Khan, here on Thursday. Both the sides discussed ongoing development projects and new initiatives. The Minister for Economic Affairs appreciated the Saudi support in the priority development areas. During the meeting, it was agreed to operationalise the Saudi Oil Facility at the earliest.

They also discussed the remaining work of development projects in the earthquake affected areas of Azad Jammu and Kashmir (AJK) and Khyber-Pakhtunkhwa.

The SFD is providing financial assistance for various development projects in the areas of energy, health, education, and infrastructure. Most recently, the SFD has committed to provide financing for Mohmand Dam Project, Shounter Hydropower Project, Jagran-IV Hydropower Project, Gravity Flow Water Scheme Mansehra, and Abbottabad-Muzaffarabad Road Project.

The Saudi ambassador assured of continued support at all levels to further strengthen the bilateral economic cooperation between the two brotherly countries.

The Saudi ambassador expressed that the Kingdom of Saudi Arabia is committed to play a much stronger role in the socioeconomic development of Pakistan.

Copyright Business Recorder, 2022

 

[ghazi52]

SNGPL, SSGC repair 887-km pipelines, rectify 1447,342 leakages​

The Frontier Post

ISLAMABAD (APP): The Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) have collectively repaired around 887-kilometer faulty pipelines and rectified 1447,342 leakages in line with the government strategy to bring down the Unaccounted for Gas (UFG) ratio.

Besides, the companies’ experts inspected around 13,388 Town Border Stations (TBSs) and rectified 633 stations after finding them leaked, according to an official document available with APP.

The state utilities have installed Electronic Volume Corrector (EVC) meters at all industrial connections and high pressure commercial connections that calculate actual volume of gas consumption, maintain record of hourly/daily gas consumption and generate tamper alarm in case of an attempt of magnetic interference with meter or other infrastructure.

Around 1,850 out of 3,655 industrial connections have been integrated with Supervisory Control and Data Acquisition (SCADA) for remote monitoring of industrial consumers for timely identification of gas theft and measurement errors, if any.

To control the line losses and bring down the UFG ratio, the cyber locks are being installed at industrial meter stations to restrict the access of consumers to the meters and regulators to reduce chances of
gas theft.

The companies are also using Laser Leak Detectors, the best available technique and gadgets, for identification of underground leakages. “High flow samplers are being used for quantification of leakages.”

The UFG losses of SNGPL and SSGC stood at 8.83 per cent and 15.85 percent respectively
during the fiscal year 2020-21.

“Volumetric loss of SNGPL remained at 34,021 million cubic feet (mmcf) of gas and SSGC 67,476 mmcf of gas, mainly because of gas leakages, measurement errors and theft.”

In 2019-20, the SNGPL and SSGC had prevented a volumetric loss of around 9,938 mmcf gas against the UFG reduction target of 14,806 mmcf gas.

The UFG is a phenomenon of gas loss that occurred due to various technical factors when gas flowed from fields to end consumers.

It is calculated as the difference between metered gas volume injected into the transmission and distribution network (Point of Dispatch/Delivery) and the metered gas delivered to the end consumers (Consumer Meter Station) during a financial year.

 

[ghazi52]

ISLAMABAD: The government on Wednesday approved pricing guidelines for the supply of Regasified Liquefied Natural Gas (RLNG) to K-Electric along with amendments to the existing legal framework and extended agreement with Saindak Copper-Gold Project with existing Chinese contractors for another 15 years.

These decisions were taken at a meeting of the Economic Coordination Committee (ECC) of the Cabinet presided over by Finance Minister Shaukat Tarin that also authorised the issuance of a sovereign guarantee or standby letter of credit (SBLC) worth Rs6.944bn as operational Viability Gas Fund for construction of Sialkot-Kharian Motorway on build-own-transfer basis.

The ECC approved a summary of the Ministry of Energy on the determination of RLNG sale price for the supply of 150 million cubic feet per day by Pakistan LNG Ltd (PLL) to KE. This removes a key hiccup to operationalisation of KE’s new 900MW power project whose first of the two units is ready for generation.

Under the decision, the ECC approved amendments to the Second Schedule of Petroleum Products (Petroleum Levy) Ordinance and policy guidelines for RLNG pricing which would now be issued as Statutory Regulatory Order also approved by the ECC.

Approves RLNG pricing guidelines for K-Electric

Now, the Oil and Gas Regulatory Authority (Ogra) would determine the sale price of RLNG on the basis of LNG delivered ex-ship price as per the contract signed by the PLL and KE as per the existing guidelines. The two sides (PLL and KE) had signed the RLNG supply contract about two years ago.

While finalising the RLNG price, Ogra would also accept PLL’s LNG import-related costs, port charges at actual and PLL’s margins as per the existing arrangement. All the charges under the Operation Services Agreement including but not limited to capacity charges, utilisation charges of the terminal as well as retainage and terminal management fee would also be taken at actual as per the existing guidelines.

 

[ghazi52]

Attock Refinery Limited (ARL) commemorated its 100 years anniversary on Friday in a solemn ceremony at the company’s general office, Morgah Rawalpindi. Shuaib A Malik, Group Chief Executive, Attock Group and Chairman ARL graced the occasion as the Chief Guest.

The Chief Guest in his address congratulated ARL management and workers on centenary celebration. He said that ARL has reached this milestone after successfully navigating through many hurdles and challenges over 100 years.

He further said that Morgah Refinery has unique distinction of first and only refinery of northern region of Pakistan and it has played a pivotal role in war and peace.

He especially mentioned the contribution and compassionate nature of Late Dr Ghaith R Pharaon, Founder, Attock Group for development of Pakistan and wellbeing of Attock Group employees even in turbulent times.

Earlier, M Adil Khattak, Chief Executive Officer ARL, in his opening address, welcomed the participants on the historical day of Centennial celebration. He shared exemplary bonding of employees with ARL with some employees now serving in ARL as 4th Generation.

Hameed Khan Jadoon, President Refinery CBA also expressed his views regarding the Centennial celebration. He expressed sentiments of workers and extended their everlasting support for progress and success of the Refinery.

Copyright Business Recorder, 2022

 

[ghazi52]

 

[ghazi52]

‘Big change’ in energy policy to ensure provision of gas:
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APP
FEBRUARY 18, 2022

ISLAMABAD: Minister for Information and Broadcasting Chaudhry Fawad Hussain Thursday congratulated Minister for Energy Hammad Azhar for bringing a ‘big change’ in the energy policy that would help ensure the provision of gas across the country in the coming days.

“Today a big change has occurred in Pakistan’s energy policy,” he said in a tweet while referring to the Weighted Average Cost of Gas (WACOG)-Bill passed by the Senate of Pakistan earlier in the day.

With this legislation, he said, the industrial sector especially in Punjab had been compensated which was callously ruined by Pakistan Muslim League-Nawaz to get elected their prime minister for the third time.

 

[ghazi52]

OKTA Group plans $500mn investment in Pakistan’s oil & gas sector​

• Objective is to 'localise supply of critical hydrocarbon resources' over the next few years

BR Web Desk
24 Feb, 2022

Islamabad-based OKTA Group plans to invest $500 million over the next few years in Pakistan's oil and gas sector with the key objective being to localise the supply of critical hydrocarbon resources, a statement issued on Thursday said.

The Group's subsidiary, OKTA Exploration & Production Limited, entered the oil and gas sector during the director-general petroleum concession (DGPC) bidding round, held under the ministry of energy, in January 2021. The company won two exploration blocks namely, Block-28 North and D.I. Khan West Block.

"Both blocks are in highly prospective zones as proved by three recent gas discoveries of OGDCL around Block-28 North and discovery of Wali-1 well near D.I. Khan West Block," the company stated.

"In near future, successful discoveries in both blocks will positively contribute to mitigate energy demand and supply gap from indigenous resources."

OKTA Group said it is not only working in hydrocarbon exploration, but its scope of work is extended to becoming a fully integrated E&P player of the region with medium-term plans of establishing its own oil refinery and oil marketing setup.
Similarly, OKTA Group is going to install a petrochemical plant for the separation of other useful chemicals from extracted hydrocarbons, it said.

"Long-term plan of the company is to invest over $1 billion in the next ten years. No doubt this huge investment within the country will create employment opportunities at different levels in the sector.

"At the same time, the company looks forward to bringing international investors into Pakistan’s Oil & Gas sector, as Investors from Russia & Saudi Arabia are showing interest for JV partnership in this area."

 

[FuturePAF]

I hope Pakistan accesses microharmomic technology to better map shale oil reserves if it bores holes in search of oil. Through this methods the US companies have been able to avoid drilling a dry oil for a few years now. Also, using this tech as well as slant drilling multiple pipes from one bore hole, costs of getting shale oil has decreased to nearly $35/barrel. Which at today’s oil prices would make Pakistan search for oil on shore profitable.

 

[ghazi52]

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Morgah, Rawalpindi, Punjab...
Attock Oil Company in the British era.
Courtesy: Umar Chaudhary

 

[ghazi52]

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CCoE body to review oil, gas exploration status​

Naveed Butt
05 Mar, 2022
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ISLAMABAD: The Cabinet Committee on Energy (CCoE) constituted a committee headed by Federal Minister for Energy Hammad Azhar to review the oil and gas exploration status and analyse the amendments required in the petroleum policy to enhance the exploration and production activity in the country.

The CCoE took the decision to form a committee in its meeting chaired by Federal Minister for Planning, Development and Special Initiatives Asad Umar at P-Block secretariat on Friday.

The meeting also discussed the Draft Model Petroleum Sharing Agreement as per the Pakistan Petroleum Exploration and Production 2012, which was approved by the Council of Common Interests (CCI).

The draft agreement will facilitate the offshore exploration of oil and gas in the country. The CCoE asked the Law Division to review the draft agreement before approval.

The CCoE also reviewed the circular debt situation and power sector performance during January 2022. The Power Division also explained the changes in the merit order dispatch of power plants due to transmission constraints and limited gas supply during January 2022.

Minister for Energy, Federal Minister for Science and Technology Shibli Faraz, Member Energy, Secretary Power and Secretary Petroleum Division participated in the meeting.

Copyright Business Recorder, 2022
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[ghazi52]

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Govt to tax Chinese petrol import​

FBR prepares summary seeking imposition of 10% regulatory duty

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The government has decided to impose 10% regulatory duty on the import of petrol from China aimed at plugging a loophole that is exploited by the oil marketing companies to avoid taxes, which has caused over Rs40 billion losses in just a few months.

The Federal Board of Revenue (FBR) has prepared a summary for the approval of cabinet to impose regulatory duty at the rate of 10% on the import of petrol from China, sources told The Express Tribune.

The Collectorate of Customs Enforcement, Karachi had unearthed the misuse of China-Pakistan Free Trade Agreement a few months ago.

The import of petrol is subject to 10% customs duty but no levy is collected if petrol is imported from China under the free trade agreement (FTA).

In the budget, the government had doubled the customs duty on import of petrol from 5% to 10%, which also significantly increased prices of the important fuel.

Read: Oil prices slide in volatile session

The share of petrol import from China in total import of the fuel has increased from 11% to 40% due to the duty-free status and routing of imports from other destinations through the Chinese ports, said the sources.

The government has already taken a hit of Rs40 billon on its revenues during the current fiscal year due to the duty-free import from China. On the current import value, the monthly losses due to the misuse of FTA have increased to Rs22 billion, said a senior FBR officer.

Petroleum imports were made part of the revised FTA in 2019 despite the fact that China was a net importer of oil and these products were not in the original FTA signed in 2006.

According to the Rules of Origin, agreed under the bilateral FTA, the trade conversion for product not wholly produced should have at least 40% of its content originating from the same party, according to a special formula specified in the rules.

However, the petrol being imported from China has less than 40% value addition, therefore, it does not qualify for the duty-free import status.

The fuel is being imported through the Chinese ports of Dalian and Zhoushan, said the officials.

The FBR raised over Rs287 billion in indirect taxes from petroleum products in the first seven months of current fiscal year, up 72% or Rs120 billion.

In July-January FY22, the FBR collected Rs70 billion in taxes on the import of petrol on account of customs duty and sales tax. It was higher by nearly one-third, or Rs17 billion.

Customs duty collection on petrol import stood at Rs36 billion in seven months, which was higher by nearly 290%, thanks to the government’s decision to double the customs duty rate to 10% in July last year.

Prime Minister Imran Khan has paused the proposed increase in petroleum product prices with effect from March till June this year.

Sources said that after finding the misuse of the Chinese trade facility, the Customs department had stopped fuel shipments and released them only after taking securities from the oil marketing companies.

All the oil marketing companies are not availing the FTA, which has resulted in a situation where some are paying 10% customs duty while others are not.

According to a report in an English daily newspaper, the oil marketing companies have recently reported to the Ministry of Energy that they had imported about 2.4 billion litres of petrol from China between January 1, 2020 and January 1, 2022.

Pakistan State Oil took benefit of petrol imports from China. It imported about 68 million litres from China and claimed customs duty waiver against the FTA certificate.

The biggest beneficiary of the facility was Shell Pakistan, which imported about 1.2 billion litres of petrol and claimed customs duty waiver, according to the reports.

The second biggest beneficiary was Gas and Oil Pakistan, which imported more than 474 million litres of petrol from China.

Total-Parco imported about 288 million litres in two years with no payment of customs duty, according to the report.

Published in The Express Tribune, March 11th, 2022.
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UAE has shown interest building oil reserves..​

CCOE seeks feasibility study as reserves critical for dealing with oil shortages

Zafar Bhutta.
March 17, 2022..

The United Arab Emirates (UAE) has shown interest in building strategic oil reserves in Pakistan – a project which will help cope with shortages if such a problem arises in future.

In the past, Pakistan has faced oil shortages several times due to the lack of strategic reserves.

Surprisingly, the government banned imports of petroleum products in 2020, at a time when global crude oil prices crashed following the Covid-19 lockdowns across the world.

However, other countries like China capitalised on the opportunity and imported crude oil in bulk to store the fuel.

Pakistan, on the other hand, failed to cash in on the opportunity provided by the cheap crude oil due to the lack of storage capacity.

Even the government planned to hedge against oil prices but could not execute the plan.

Recently, the crude oil prices were hovering at multi-year highs due to the Russia-Ukraine war before receding back to near $100 per barrel. Different countries such as the United States have started using their strategic reserves due to the geopolitical turmoil.

The reserves of petroleum products, especially high-speed diesel (HSD), are depleting fast, raising the spectre of another fuel crisis across the world if the war continues.

In the past, different governments took up the matter of building strategic oil reserves in the country but could not implement the plan.

The practice of curbing local petroleum production owing to the lack of storage capacity continues as the power sector has refused to lift furnace oil from refineries.

Under such circumstances, experts believe the government should build strategic reserves, even in partnership with friendly countries like the UAE.

Previously, Azerbaijan also offered Pakistan to help build strategic reserves and provide oil on deferred payment without government guarantees. However, after so many years, the plan has not yet materialised.

The UAE already has strategic reserves and has provided the facility to different countries like India for oil storage. Now, it is planning to build oil storages in Pakistan.

The two countries have partnered with each other in Pakistan’s largest oil refinery – Pak-Arab Refinery Limited (Parco). There is also a plan to set up another refinery in the coastal area of Balochistan.

Sources said that the UAE had also offered to export oil to Pakistan for building fuel reserves.

In that regard, the Cabinet Committee on Energy directed the Oil and Gas Regulatory Authority (Ogra) to conduct a feasibility study.

After conducting the study, the government will decide whether state-run energy companies should build the strategic oil reserves or hand over the project to the UAE or any other friendly country.

The committee directed Ogra to undertake a pragmatic study to develop strategic reserves of petroleum products to help Pakistan take benefit of the slump in global oil prices.

The decision was taken during a meeting held under the chairmanship of Federal Minister for Planning, Development and Special Initiatives Asad Umar.

The Petroleum Division presented a report on the development of strategic petroleum reserves. The meeting was informed that a working group comprising Oil and Gas Development Company Limited (OGDCL), Pakistan State Oil (PSO), Pakistan Electric Power Company (Pepco), Parco, Total Parco Pakistan Limited and Pakistan Refinery Limited (PRL) was formed to develop a concept paper and study the strategic reserve requirement in the country.

The group has completed its initial assessment and a detailed feasibility study is being planned based on recommendations of the working group. According to sources, there could be different options for building the strategic reserves. OMCs can build oil reserves in association with the government in a shared model.

In the prospective study, Ogra will also focus on tariff, capacity and locations of the proposed strategic reserves of petroleum products.

It was informed that the maritime ministry had also developed a proposal in that regard.

Therefore, directives were issued to constitute a committee under Ogra with the maritime ministry and Petroleum Division as members for finalising the proposal and reviewing a detailed framework for the establishment of strategic petroleum reserves.

Earlier, PSO was proposed to build the strategic reserves. However, it was estimated that PSO would need Rs15 to Rs20 billion to build the reserves.

The working group had proposed to the government to set up a separate company with the mandate to build the reserves and to allocate Rs1-2 per litre out of the petroleum levy to raise funds for building them.

It further suggested that a separate company should manage funds to build the strategic reserves and added that Pakistan could store more petroleum products when global oil prices declined.

Similarly, the country could use petroleum products out of the reserves when oil prices go up globally.

Mulling over whether the government should build storages for crude oil or petroleum products, the officials mentioned that the countries with storage for crude oil had higher refining capacity, adding that Pakistan only had 40% refining capacity and the rest was imported.

“Therefore, a more feasible option was to build storages for finished petroleum products.” Moreover, Pakistan imports petroleum products from the south to meet demand in the north. Therefore, the working group recommended building storages in the north.

Published in The Express Tribune, March 17th, 2022.

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[ghazi52]

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As Russia develops the Yamal LNG project facility -
- Islamabad and Moscow are in talks to a multi-billion dollar government-to-government import deal. The Yamal LNG Project includes the development of the giant South Tambey (Tambeyskoye) gas field that is located near Sabetta in the Yamal peninsula in Russia. The Russian government has declared the project to be of national interest at a cost of around $27 billion.

This is a new addition to the energy cooperation between Pakistan and Russia as two countries are already working on different projects including the Pakistan Gas Stream, a gas pipeline from Kazakhstan and an offshore gas pipeline. Sources said the Pakistani government was interested to sign a government-to-government deal with Russia to import LNG to meet its growing gas demand.

They added that Russia was developing the Yamal Project, which would be one of the largest LNG facilities in the world. Russia is also meeting the demand of Europe by exporting gas through a pipeline despite the opposition of the US. The sources said Pakistan LNG Limited was in talks with Russian firms Gazprom and Novatek to import the gas. At present, Pakistan has a space on the second LNG terminal owned by Pakistan Gasport Consortium Limited (PGPC) to import the product despite a fresh deal of imports from Qatar. At present, Qatar controls the Pakistani market in terms of LNG import.

Earlier, Saudi Arabia had dominated the Pakistani oil market. However, Qatar had started supplying LNG to Pakistan. This affected the oil market on the supply of fuel to power plants as they had started using LNG to produce electricity. The sources said Pakistan was currently importing LNG from Qatar and wanted to apply this as a benchmark price for other countries including Russia. They said the benchmark price set by Pakistan might cause hurdles in implementing the LNG deal with Russia. Moreover, the prices of LNG had globally witnessed a sharp increase.

Secondly, the Russia is too far away and Pakistan might face higher freight charges in comparison with LNG cargoes coming from Qatar. However, Russia might have the option to follow LNG cargo swap with other companies operating close to Pakistan that could result in cutting the freight charges. Pakistan meets around 24% of its gas demand through LNG imports. Initially, the PML-N government had planned to utilise LNG in industrial, power and commercial sectors.

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https://www.facebook.com/video.php?v=805736950830670

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