niaz
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@niaz I'm pretty sure your claim that the single PARCO 250,000 bpd refinery will be able to fulfill the country's entire demand for refined petroleum products is incorrect. The country's existing refineries have way inadequate production and are all based on obsolete technology which results in a high output of furnace oil and a low output of high end petroleum products.
First, Pakistan is able to fulfill only about half of its demand for refined petroleum products. See here:
https://tribune.com.pk/story/1891732/1-pti-govt-expeditiously-pursue-ip-gas-pipeline-project/
The crude and petroleum products import bill for the country is massive. The following article quotes Minister for Planning Khusro Bakhtiar as saying:
https://www.dawn.com/news/1444295
Hon Wulff.
I have read the Tribune article. It states:
Quote
The active oil refining capacity of only 13 million tons per annum against the consumption of 26 million tons petroleum products result in massive imports of crude and petroleum products with import bill of US$ 9.10 billion during 2017. No state-of-the-art refinery has been established in the country in the last 15 years.
The transport sector remains the major consumer of around 60% of oil products.
Parco Coastal Refinery (PCR) of 250,000 barrel per day capacity is likely to be commissioned at the end of plan period expected to save US$1 billion by substituting expensive imports of refined products.
Unquote
A capacity of the 250 K bpd of new Parco coastal refinery translates into about 12.5-million tons per year. Add this to the existing 13-million tons active capacity and you arrived at 25.5-million tons against the demand of 26-million tons. Thus very close to meeting country’s refined products demand as of now.
BTW Pakistan imported 6-million tons of furnace oil (fuel oil) during 2017 since furnace oil import is stopped and replaced by LNG, total demand may even be less than 25-million tons.
Minister's statement from Dawn:
Quote
“Every year, Pakistan imports crude petroleum oil worth of $16bn. If an oil refinery is established in Gwadar, Pakistan would be able to save its import bill worth over $7bn,” he stressed.
Unquote
This statement is a gross exaggeration. The oil import bill of $16-billion includes both crude & refined products.
Quote
KARACHI: Pakistan's oil import bill rose nearly 30.43 percent year-on-year to $12.928 billion in July-May 2017-18 owing to an increase in global prices of crude oil and rising demand for petroleum products in the country. The amount of the oil import bills is around one-third of the total import bill for the period.
Unquote
https://profit.pakistantoday.com.pk...il-import-bill-surges-by-30-43pc-to-12-928bn/
Oil prices can go up or down, for the arguments sake we accept that Oil import bill is $16-billion.
Since refining capacity is only 13-million p.a. Crude oil import bill at $70 per bbl (approx. $520 per ton) comes to only about $6.76 –billion. The rest is spent on the import of refined products. Actually, crude import bill will be less because the refineries consume close of 3.5-million tons of indigenous crude.
The “value added” by the refinery or the refinery margin is seldom more than 4 to 5 dollars per bbl because one has to pay for the crude input.
The Tribune article referred by you also mentioned that Parco refinery of 250 k bpd (12.5-million tons) will result in a saving of about $1-bilion. This translates into a margin of about $10 per bbl which also appears to be rather optimistic.
Thus the new Gwadar refinery will not and cannot reduce the import bill from $16-billion to $7-billion. Complete replacement of refined products will at best reduce the oil import bill by $2 to $2.5-billion. Admittedly it is a lot but certainly no way near $7-billion.
Besides, as mentioned earlier, Parco coastal refinery, if & when it actually comes on stream will meet Pakistan requirements for the time being. The 500 K bpd (25-million) ton Saudi Gwadar refinery may not save Pakistan any money at all until such time that products are consumed within Pakistan because the GOP will have to pay for the crude and export most of its production. It is quite possible that during periods of a bear market with negative refinery margins, it may even incur a loss!
Finally, it is true that the GOP oil/energy import bill is massive and will go on increasing since the energy demand increases at about half of the annual GDP growth rate. But it will not be significantly be reduced by setting up new refineries. The only way is to find new oil/gas fields within the country and to exploit indigenous resources such as Thar coal & tight gas.
One should always take the statement by the politician with a pinch of salt.
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