Bosicor refinery to start production by June 2010

[LahoreEstate]

Friday, April 03, 2009
By Saad Hasan

KARACHI: Bosicor Pakistan is set to start production from the country’s largest oil refinery by June 2010 as part of its endeavour to become a leader in petroleum refining and marketing business, its Chairman Amir Abbassciy said on Thursday.

The refinery, which will process 120,000 barrels of crude oil a day, and is in addition to its existing 30,000bpd refining unit, is going to complement the company’s oil marketing arm, he said.

“We will export our products and will go international,” he said here at a press conference where top men from the company’s refining, petrochemical and marketing businesses were also present. “It can be done.”

Ambitious as it may sound at a time when Pakistan is suffering from a severe energy deficit, Bosicor which joined hands with private equity giant Abraaj Capital last year, has pumped $600 million to form a fully integrated petroleum business.

It is enhancing production from its existing refinery to 40,000bpd in the next few months. Work is underway on the construction of a sub-sea pipeline and single buoy mooring facility. And by year-end it will have constructed the country’s largest oil storage tanks.

Bosicor is also setting up an isomerization plant which will use Naptha to produce high-quality gasoline. Naptha, a petroleum product, which is presently exported at a very cheap price, will also be consumed as raw material in an under-construction petrochemical complex.

Its marketing company is also expanding retail outreach as the number of petrol pumps will be increased to 50 by June this year, Abbassciy said, adding that after that, fifty fuel stations will be added each year in the network.

But while Bosicor expands the business, its young chairman minced no words in saying that the government must relax regulations which contributed to financial hemorrhage of refineries last year.

“Hedging is not allowed in Pakistan and we can not take forward cover in dollars,” he said, referring to advance booking of the foreign currency at current exchange rate. “It is very difficult to operate in such a situation when rupee depreciates all of a sudden.” The government, he said, has been asked to include exchange rate fluctuation in end-price of petroleum products.

Kaleem Siddiqui joins Bosicor: Kaleem Siddiqui, the former Managing Director of Pakistan State Oil (PSO), was also introduced as the President of the petroleum marketing arm of the company.

Asked how he plans to find a niche for the business, he said a combination of refinery and marketing businesses will give a competitive edge to the company in the market. “But with so much of the product, we need to review every possibility. We need to increase retail outlets and focus of industrial consumers.”

Referring to 500 tons of LPG per day that will be available from the new refinery, he said LPG dispensers will also be set up at the company outlets.

He even said that Bosicor will be in a position to lower the prices of petroleum products, provided the government allows free-competition among marketing companies. “I completely support the free market model similar to the US.”

Petrochemicals: Wasi Khan, who will look after the petrochemical plant, said it will help save $100m in import substitution by producing chemicals locally. “We have a subdued petrochemical industry in Pakistan because production is negligible.” Chemicals used in the making of paint and plastic will be produced by the company, he said.

Refinery: Zafar Haleem, in-charge of the refining side, said the new refinery will help cut import of petroleum products by half once it comes online. “That means import substitution of $200m.”

http://www.thenews.com.pk/daily_detail.asp?id=170544