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Local oil refining companies in trouble as demand falls due to lockdown
Oil pumps in operation at an oilfield near central Los Angeles on February 02, 2011. World oil prices recently rallied close to $100 per barrel, as traders absorbed impressive fourth-quarter US economic growth and fretted over worsening political turmoil in Egypt. Most other commodity markets also won support this week from news that the US economic recovery picked up speed in the last three months of 2010, stoking hopes of strengthening demand for raw materials. The US economy grew at its fastest clip in five years in 2010, the Commerce Department reported, as the country bounced back from recession and fears of a double-dip recession ebbed. AFP PHOTO/Mark RALSTON (Photo credit should read MARK RALSTON/AFP/Getty Images)

Local oil refining companies in trouble as demand falls due to lockdown

ISLAMABAD: Attock Refinery Limited (ARL) has closed down its largest plant, which was refining 26,000 barrels of crude oil per day, due to low uplift by oil marketing companies, according to media reports.

The refinery’s top management, in a letter written on Monday to Secretary Petroleum Division Mian Asad, informed the government that oil marketing companies (OMCs) have not bought products from the refinery, forcing ARL to close the plant.

However, according to the letter, a copy of which is available with The News, the refinery, which earlier closed down two smaller units, has now made the smaller plants partially operational to refine 12,000-13,000 barrels per day.

If the shutdown of ARL happens, which seems imminent, local oil fields will be choked if crude oil is not lifted from them, the letter warned.

“More importantly, this will also squeeze gas supply from oilfields in the northern region,” the letter noted.

The government had last week restricted the import of crude oil and asked OMCs to procure refined oil from local refineries to cater to the needs of the citizens living in the northern areas of Pakistan so that local companies are not forced out of business by the coronavirus crisis.

However, the letter complains that OMCs have ignored the government’s advice.

Meanwhile, the government has allowed the Pak-Arab Refinery (PARCO) to run its operations, which were earlier shut down. According to sources, PARCO will run at minimum capacity as there is no demand of petroleum products in the country.

Adil Khattak, Chief Executive Officer of Attock Refinery Limited, while talking to media, said that ARL’s vehicles, while coming from a decanting facility, have been seized by police in Fatehjang.

According to him, police say that since there is a lockdown, they have seized the vehicles, despite knowing the fact that the refinery business is part of essential services exempted from the lockdown.

“But the policemen said they would not release the vehicles, instead they would use them themselves as they have no vehicles,” he added, noting that the government needed to restore the writ of law and the authorities concerned should immediately release ARL vehicles.

Byco Petroleum Pakistan Limited has also been forced to put its refinery on cold circulation due to the absence of demand for petroleum products, a statement said.

The step has been taken to reduce the current glut and create adequate space for locally produced crude and condensate, as the consumption of petrol products falls drastically.

“Byco chose not to fully shut down the refining complex so that crude refining operations can be restarted in a matter of hours should the demand pick up again,” the statement said.

Appreciating the Ministry of Energy’s proactive steps for business amid the lockdown, the company said it supported that government’s stance to prioritise the consumption of domestic crude oil.

“We anticipate that demand will pick up soon so that we can quickly resume production at Byco,” Vice President of Commercial at Byco Petroleum Pakistan said on Monday.

The country’s refining industry stands shoulder-to-shoulder with the nation to persevere against the challenge of the COVID-19 pandemic. “We pray and trust that Pakistan will emerge stronger subsequent to successfully countering the pandemic,” he added.