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Challenges of the Oil Refining Sector in Pakistan by Aftab Husain Pakistan Refinery Limited Pakistan Energy Conference Islamabad, April 10-12, 2011 . Energy Insecurity…………………Tsunami. Energy Crisis. PAKISTAN. Deficit...Shortages...Gap. Implications of business as usual.

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Presentation Transcript
slide1
Challenges of the Oil Refining Sector in Pakistan

by Aftab HusainPakistan Refinery Limited

Pakistan Energy Conference

Islamabad, April 10-12, 2011

energy insecurity tsunami
Energy Insecurity…………………Tsunami

Energy Crisis

PAKISTAN

Deficit...Shortages...Gap

implications of business as usual
Implications of business as usual

Unless there is a political will and resolve to implement an integrated energy plan the country will continue to face crisis on the energy front

With nominal GDP growth projections of 2.5 – 4% the energy consumption by the year 2025 would be 138 MMTOE which translates to a Power Requirement of 39,000 MW Oil Requirement will be 34.5 MMTOE Gas Requirement 69 MMTOE

The total energy import bill in 2025 at US$ 100/ bbl will be

$ 62 billion

slide5
Pakistan: Brief Overview

Source: FBS Pakistan

5

slide6
Pakistan’s Strategic Location

Land locked, energy rich Central Asia

Booming China/India

East Asia

Energy surplus Middle East

Opportunity to become Asia’s trade, energy and transport corridor

6

pakistan energy mix 2010 11
PakistanEnergyMix (2010-11)

Source: PIP Pakistan Energy Outlook 2011

7

agenda
Agenda

Oil: Global and Regional

8

global refining capacities million bpd
Global Refining Capacities (Million bpd)

Major additions in Middle East, China & India

Source: BP Statistical Review 2009-10

10

regional refining capacity
Regional Refining Capacity

China leads the region, followed by India

Source: IEA

agenda12
Agenda

Pakistan Oil & Refining Landscape

fo consumption pattern 10 year
FO Consumption Pattern (10 year)

Source: PIP Pakistan Energy Outlook 2010

14

pakistan s supply demand forecast
Pakistan’s Supply & Demand Forecast

Source: PIP Pakistan Energy Outlook 2010-11

17

factors influencing oil prices margins
Factors Influencing Oil Prices/Margins

19

  • Fundamentals

- Supply & demand

- Product & crude inventories

  • Geo-political situation
  • Economy of major consuming countries
  • Currency – impact of dollar on price
  • Commercial & non commercial actors
  • Speculators for short term gain
hydroskimming margins
HydroskimmingMargins

Source: PLATTS

historical refining margins
Historical Refining Margins

$/bbl

Source: IEA 2010

22

refinery margin hydroskimming vs conversion
Refinery Margin: Hydroskimming Vs Conversion

Numerous pre-owned conversion units on sale – low capex solution

agenda24
Agenda

Challenges & Opportunities

challenges cont d pricing developments
Challenges (cont’d) :Pricing Developments
  • Incidentals from the product price build up removed whereas refineries pay on crude imports and a premium on freight
  • Kero and LDO pricing formula tempered – No PDC
  • Distorted Motor Gasoline pricing mechanism Vs import price
  • Jet fuel import price is higher than local
  • Additional FE expenditure - $32 million and refineries sustained revenue loss of about Rs.2.8 billion on MS production in 2009-10
  • High oil prices to continue – tariff on HSD under threat???

No tariff protection--- No refineries

refining vision
Refining Vision
  • High Tech/Deep conversion/Integrated refineries
  • Serve as Strategic Asset
    • – meet country demand & enable exports
  • Meet regional and global product specifications

29

“Refineries having the technologyand capacity to produce environmental friendly products, meet domestic demandand enable exports”

slide31
End

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No Subsidies & Protection – Compete & Survive

Thank You!!!

Q&A

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