Pakistan's Oil Refining Sector Set for $6 Billion Upgrade

Pakistan's oil-refining sector is facing significant challenges despite having five refinery groups capable of processing 449,400 barrels of crude oil a day. However, the actual refinery throughput is only around 10 million tonnes annually, implying utilisation of less than 49%. The main issue is that most refineries were designed to produce furnace oil, but domestic demand for this fuel has largely disappeared.

The government has proposed a $6 billion programme to upgrade the existing refiners: Pak-Arab Refinery Company (PARCO), Attock Refinery, National Refinery, Pakistan Refinery, and Cnergyico. The upgrades aim to nearly double domestic petrol output, increase diesel production by almost half, sharply reduce furnace-oil production, and bring the industry up to Euro-V fuel standards.

The distinction between refining capacity and sophistication is crucial. Pakistan needs more sophisticated facilities capable of converting a larger proportion of each barrel of crude into petrol and diesel. The proposed upgrades are expected to address this issue.