Pakistan Refinery Limited (PRL) on Tuesday warned of shutting down their operations today (Wednesday) if their high speed diesel (HSD) deadstock remains unpurchased by the local oil marketing companies (OMCs).
Pakistan’s refineries are facing serious inventory storage issues owing
to a slump in diesel demand as super floods have swamped the highways, slowing the movement of heavy traffic, which is the largest consumer of this fuel.
“In the given situation and considering the current upliftment trend and production level, the PRL can only operate for another day…,” the PRL said in a letter to the Ministry of Energy (Petroleum Division) and Oil & Gas Regulatory Authority (OGRA).
The refinery management said the HSD upliftment crisis is worsening, causing inventory to pile up beyond their capacity, which is forcing them to switch off their operations.
The refinery said that its HSD production during the month of August 2022 was 55,585 tonnes and the declared availability was 65,000 tonnes, which included carryover stocks from the last month.
The total upliftment in August stood at 54,412 tonnes and PRL had to carry forward a sizable inventory of over 15,000 tonnes.
The refinery said, having no choice, it had to operate at a lower throughput in view of the supply chain issues, resulting in 15 percent less output than its potential capacity.
During September 2022, up till now PRL has produced 25,887 tonnes, whereas the upliftment stands at only 13,842 tonnes, leaving it with a mammoth dead stock of 26,653 tonnes.
PRL said that it did receive some orders from the PSO (Pakistan State Oil); however, PAPCO, citing their constraints, refused to procure any product from them.
“We request you to urgently look into this matter and advise OMCs to enhance diesel upliftment to ease the rising inventory at PRL, otherwise we will have no other option but to shut down our refinery,” the PRL stated.
As per the DSSP Report shared by OCAC (Oil Companies Advisory Council) on Monday September 12, 2022, several OMCs have stocks much lower than the mandatory cover of 20 days and thus availability of ullages; however, they are refraining from buying products from refineries.
The PRL said avoiding a refinery shutdown was imperative for sustainable and uninterrupted supply of petroleum products in the country especially JP-1 to EJHD at Karachi Airport and JP-8 to PAF along with supplies of furnace oil and petrol to OMCs.
Country’s diesel consumption stands at 14,000 to 15,000 tonnes, whereas it has 600,000 tonnes of diesel stocks with PSO having the largest share.
The diesel sales have been ebbing lower and lower after floods struck Sindh, Balochistan, and some parts of Punjab province.
