Attock Refinery shuts down two processing plants with warning of closing remaining two

ISLAMABAD-Attock Refinery Limited has shut down two processing plants owing to increased imports by oil marketing companies (OMCs), which has resulted in slump of up to 43 percent in the sale of local oil in the last four months. The Attock Refinery Limited has further warned that if the sale situation did not improve, it will be forced to close the remaining two processing plants as well, bringing the entire production to halt, official source told The Nation.
Attock Refinery has been forced to shut down two of its processing plants on Monday due to continued low upliftment of petrol and diesel by OMCs which prefer to supply imported products in ARL’s supply area, which is total violation of Petroleum Rules which prioritizes upliftment from local refineries, said a source in ARL. ARL has been requesting both Ministry of Energy and OGRA to stop this malpractice which is not only causing foreign exchange loss but also results in higher consumer prices due to addition of higher freight charges. The letters written by Attock Refinery Limited to the Caretaker Minister of Energy and Ogra, last week, for help in selling local oil have not yielded any results yet, as a result of which Attock Refinery has closed two processing plants.
Due to the closure of the plants by ARL, local petroleum production of diesel and petrol decreased to 60%, said the source. The sale of petrol has declined by up to 43 percent while high speed diesel by 25.45 percent during four months of August to November, said two separate letters written by ARL to the Caretaker Minister for Energy and Oil and Gas Regulatory Authority. In a letter addressed to Caretaker Minister for Energy Mohammad Ali, ARL said that the refinery processes 100 percent local indigenous crude oil from Khyber Pakhtunkhwa and Potohar regions.
Due to falling output from these fields Attock Refinery Limited currently operates at 77%, 80% capacity. ARL has been requesting Petroleum Division, Ministry of Energy to allocate 5,000 barrels per day of condensate crude oil from fields in Sindh, which is currently being exported, but the proposal is yet to be implemented in spite of its approval by ECC six months ago, said the letter. It is increasingly becoming difficult for ARL to operate even at lower throughput of 80% due to low upliftment of its products mainly petrol and diesel by oil marketing companies (OMCs). The sales figures of last four months show that only 38% of petrol and 47% of diesel sold by OMCs in ARL’s sales envelope was uplifted from ARL and the rest was brought in from local or imported sources causing not only foreign exchange loss but also higher Inland Freight Equalization Margins (IFEM) which is added up in consumers sales prices. The lower upliftment of products also frequently forces ARL to further reduce throughput or shutdown one or more of its plants. The situation has once again reached an alarming point where ARL will be forced to shut down if no corrective measures are taken.
Complaining regarding the role of Ogra, the letter said that as per Pakistan Oil Rules 2016, 35 (g) it is OGRA’s responsibility to ensure that OMCs prioritize upliftment from local refineries over imports but inspite of a number of submissions and reminders OGRA has failed to take any tangible corrective action. In a separate letter written to Ogra, ARL said that the sales data of the last four months indicates that product from other sources was moved by OMCs in ARL fed area thus impacting the country IFEM/consumers, and ARL product was not prioritized. The data shared by ARL with Ogra said that during the month of August off-take from ARL was 8.64 percent less than the offered quantity of 63000 metric ton offered quantity, in September 20.48 percent less from 54000 MT, in October 43 percent less than 69000 MT, and in November the off take was 27.59 percent less than the offered quantity of 71000 MT. The letter said that ARL was operating at lower throughput due to high stocks creating serious planning and operational issues. Even for the current month of December 2023, the uplifting situation is not encouraging and ARL would again be shutting down its units to manage high stocks of MS and HSD, the letter maintained.

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