KARACHI:The government is likely to approve a policy this week to upgrade its existing refineries and enhance their capacity and efficiency, industry officials said on Monday.
The policy, known as the ‘brownfield refining policy’, has been pending for several months and the government wants to finalise it before its term ends next week.
“The government has communicated its intention to approve the policy to the local oil sector and we expect it to be approved this week,” an official said, requesting anonymity.
The present government has already approved a “greenfield refining policy” to set up new deep-conversion refinery in the country. Under this refining policy, a memorandum of understanding (MoU) has been signed by state-owned enterprises with a foreign firm to set up the refinery.
Sources said that the brownfield refinery policy has been lingering on for the last several months, with the government now showing commitment to approve it before its departure.
Local refineries are meeting 55 percent of Pakistan’s annual demand for petroleum products, which include supplies for defence needs and essential transportation, the draft of the refining policy states.
Domestic refineries make annual foreign exchange savings of more than $1 billion and process about 70,000 barrels of local crude and condensate per day. They also generate more than 100,000 direct and indirect employment opportunities and make a substantial contribution to the national exchequer and gross domestic product (GDP).
According to the draft of the oil refining policy, all existing refineries are encouraged to upgrade/modernise/expand (upgrade) to produce environment friendly fuels as per Euro-V specifications and to maximise production of motor gasoline and diesel by minimising furnace oil (FO).
The selection of equipment, technology, or process would be on project-to-project basis by the concerned refineries to ensure that the final finished products meet the notified Euro-V specification, while minimising FO.
This upgrade could include addition or integration of petrochemical production, whether individually or jointly by the existing refineries.
The objectives of this policy are to provide an enabling environment for long-term sustainability of the existing refineries and to attract foreign investment in new refinery projects.
This should help achieve energy security through gradual increase in self-reliance in petroleum refining capacity of the country and reduce dependence on imports of refined products by incentivising investment in up-gradation and modernisation of existing refineries.
Sources said that the approval of the brownfield refining policy would attract $4 to $5 billion in investment for upgrades and modernisation of local refineries.
