Pakistan Refinery Limited (PRL) has announced to convert its plant into a deep conversion refinery to keep up with the changing requirements of the market. According to a notification sent to the Pakistan Stock Exchange (PSX), PRL is expected to invest around $1 billion or approximately Rs138 billion for the transformation of its plant. This will result in decreased production of furnace oil which the govt has already banned the industries from using.
Deep conversion refineries produce only 2-3% furnace oil, depending on the design and crude diet, whereas conventional refineries produce up to 30% furnace oil. It is expected that in the next two years, the demand for furnace oil will drop to its lowest level with only some private-sector units consuming the fuel.
Deep conversion refineries make value-added petroleum products at the optimum level and produce minimum furnace oil. These are equipped with a cracking facility, which uses furnace oil to produce gasoline and high-speed diesel (HSD) and minimise furnace oil production.
While furnace oil demand is going down, the refineries have to work on reducing their overall production as a higher output means higher furnace oil production, for which the refineries have no storage capacity.
For instance, if a refinery produces 30% furnace oil at 100% production capacity, it will produce 15% furnace oil by utilising 50% capacity. Thus, this strategy prevents refineries from working at maximum capacity.
PRL, through an international consultant, has carried out a detailed feasibility study, which entails evaluation of different technological variants, technical and financial viability.
The company has sought expressions of interest from engineering contractors for appointment as front-end engineering design (FEED) and engineering, procurement and construction (EPC) contractor for the upgrade.