Oil smuggling from Iran forcing refineries to drastically reduce production

ISLAMABAD  -  The oil smuggling from Iran continues unabated, forcing the refineries to dras­tically reduce their production including Attock Refinery Limited which has shut­down 66 percent operations and warned that if no remedial measures are taken, they will be forced to bring the entire pro­duction to a halt within the week.

The major Oil Marketing Companies (OMCs) have refused to take supplies from ARL due to multiple reasons including free flow of smuggled products, said a leter written by ARL to chairman Oil and Gas Regulatory Authority (Ogra). 

The oil smuggling from Iran contin­ues unabated and is now available in all nooks and corners of Pakistan forcing the refineries to drastically reduce their production. 

The copy of the letter available with The Nation said that ARL is facing serious chal­lenges in disposing off its POL products especially HSD production, despite of the fact that ARL just resumed its operations after a major refinery turnaround. 

The major OMCs have already cau­tioned us in writing and even refused to take supplies from us due to multiple reasons including free flow of smuggled product in our area, which is most un­fortunate, as the menace of smuggled product has now reached to our supply envelope which previously was mostly restricted in the south, the letter said. 

“With no respite in product uplift­ing, and to avoid a complete refinery shutdown which will disrupt the entire crude oil supply chain, we have shut down our major refinery unit of 32,400 BPD and would now be barely operating at 33% of the capacity. This too is de­pendent upon continued upliftment by the OMCs failing which complete refin­ery shutdown is imminent in next 3-4 days,” the letter said. 

The current state of affairs is most un­fortunate, and is a serious threat to the continuation of ARL refinery operations and processing of local crude oil. The con­tinuation of this situation is seriously war­ranting us to review our offer extended vide our letter dated March 25, 2024 for signing of upgradation agreements under the Pakistan Oil Refining Policy2023 for Brownfield Refineries. 

The refinery has sought Ogra’s support in resolving the matter. It is noteworthy that in December 2023 also Attock Refin­ery Limited had shut down two processing plants owing to increased imports by oil marketing companies (OMCs), which had resulted in slump of up to 43 percent in the sale of local oil in the last four months.

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