Pakistan Refinery Limited (PRL) is working to upgrade its operational system in order to produce EURO II standard High-Speed Diesel (HSD) by the end of June, which is expected to save a handsome amount of its Rs. 1.15 billion on the account of penalty and price differential.
The company will become compliant with the regulatory requirements of producing an improved quality of diesel with comparatively less harmful content for the environment.
According to the stock filing, the oil refining company has considered new crude oil recipes which are expected to positively change its product slate making the refinery compliant with the regulatory requirements.
In this regard, the company has undertaken certain non-CAPEX options to achieve operational and financial sustainability.
PRL stated that it is now producing Motor Gasoline (Petrol) of 92 RON thus saving the RON differential penalty. It is also producing MS 95/97 RON for generating additional revenue.
These are additional initiatives being taken by the company besides its Refinery Upgrade Project in order to improve its margin and revenue streams.
PRL had earlier unveiled its plan to invest an amount of $1 billion on upgrading technology to elevate the quality and standards of its petroleum products including diesel.
It is expected that oil marketing companies will buy the upgraded quality products from Pakistan Refinery Limited which are purchasing imported petroleum products these days.
In a letter to secretary Ministry of Energy (Petroleum Division), the management said that the oil refinery is maintaining enough reserves of petroleum products, however, OMCs are reluctant to purchase petroleum products from the refinery that could lead to severe financial losses to the company leading to its closure of plants.
The PRL management also requested the ministry to intervene and restrict OMCs to lift petroleum products from the refinery as per allocated quota.
PRL Plans to Produce Upgraded Furnace Oil
Pakistan Refinery Limited (PRL) has plans to upgrade its operational systems in order to produce high-standard prescribed petroleum products including IMO-2020 Furnace Oil by June this year.
According to the stock filing, the oil refining company chalked out its plan to enhance its quality of furnace oil by reducing the sulphur content in this particular petroleum product, which will make the refining company the first refinery in Pakistan to produce very low sulphur or IMO-2020 standard furnace oil—a premium product fetches a much higher price than High Sulphur Furnance Oil to Very Low Sulphur Furnace Oil currently produced.
The conversion of furnace oil might provide an opportunity to refinery to sell out its product to the power sector and industries not only in Pakistan but to export it in different countries having demand for such products.
The furnace oil demand has not only decreased in the country, particularly in the power sector, but also in different countries hence other local refineries are working to set up additional units in the plant that covert furnace oil into petrol or diesel.