Pakistan Refinery Limited (PRL) has kick-started a refinery expansion and upgrade project (REUP) costing $1.7 billion in a bid to double its installed crude processing capacity to 100,000 barrels per day and boost the production of products with high profit margins as well as low-sulphur fuel including Euro-II and Euro-V petrol and diesel. In addition, the installation of a deep-conversion refinery, a relatively new technology, along with the existing hydro-skimming refinery will give an edge to the state-owned company, which will become a pioneer in producing propylene chemical in the country. The chemical is used in the production of polypropylene plastics. As per PRL financial report “work on front-end engineering design (FEED) of REUP is progressing as per the agreed timeline with targeted completion by September 2024 and the next step licence and engineering agreements have been signed with technology licensors. The search for the right potential strategic investor continues and PRL is engaged with potential investors in this regard.” The project is set to be completed by the end of calendar year 2028, 25% of financing would be provided by the government while the refinery would arrange $200 million a year by exporting furnace oil. The government is collecting a 10% duty on sales of petroleum products and depositing it in an Escrow account. Funds from the account will also be available to the refineries for upgrade projects. The MD revealed that the production of the outdated furnace oil would go down to zero from the current level of 30-40%. At present, the company is exporting furnace oil at negative margins. However, this has helped the refinery to make profit on overall production. PRL, a subsidiary of Pakistan State Oil (PSO), has embraced the Brownfield Refinery Policy, approved by the federal cabinet in August 2023.

In the first quarter ended September 30 of the current fiscal year 2023-24, the PSO’s market share in diesel and gasoline increased by 4.5 percent and 4.2 percent respectively, reaching 55 percent and 47.9 percent. The PSO remained a top contributor having 37.43 percent of total HSD storage capacity. The PSO imports HSD from Kuwait Petroleum Corporation (KPC) under a government-to-government agreement and spot purchases sometime.

In a strategic effort to attract foreign investment in mining following the out-of-court settlement of the Reko Diq project, Pakistan is partnering with Kuwait to establish a $1 billion mining fund. A Pakistani state-owned company has been chosen to lead the collaboration with Kuwait for this fund. Initial discussions between the two countries have been positive, with a Kuwaiti company expressing interest in mining metals and minerals for renewable energy use. A detailed plan, including timelines, is expected to be presented to a joint working group to advance the fund’s development. The Pakistani government has already established a Mineral Cell under the Petroleum Division and is actively revising the National Mineral Policy to encourage foreign investment, particularly in Balochistan’s mineral-rich areas. The recent memorandum of understanding with Kuwait, signed during the caretaker prime minister’s visit last year, includes investment cooperation and water supply projects essential for mining in Balochistan’s Chagai district. Additionally, Pakistan’s government is in ongoing discussions with the UAE for similar collaborations in mining. A recent conference in Saudi Arabia also indicates potential investment interests in Pakistan’s mining sector.

The refining sector has halted the export of fuel oil after a surge in domestic demand driven by lower hydropower generation and colder weather, industry officials said. The country's fuel oil consumption rose to 8,000-10,000 tonnes per day in January, up from less than 4,000 tonnes per day a few weeks ago, when refineries were exporting the surplus. “Fuel oil demand picked up after canal desilting started in the country, which stopped the release of water from dams, thus bringing down the hydel power generation on the lower side,” an official said. He said the drop in hydropower output was the main factor behind the increased use of furnace oil-based power plants to meet the electricity demand. The extreme weather conditions also played a role, as the shortage of gas led to lower power generation from gas-fired plants. "The fog in various parts of the country, especially in the populous province of Punjab, boosted the gas consumption for heating purposes." Another official said the consumption of fuel oil in the country ranged from 8,000 tonnes to 10,000 tonnes per day, which was less than 4000 tonnes a few weeks ago when refineries were exporting it. Power plants were not buying fuel oil from the local refineries in the first half of the current fiscal year due to low demand. “Now the situation has reversed as the refineries did not entertain the offers for the export of fuel oil recently,” the official said. He said one refinery cancelled the plan to export 50,000 tonnes of fuel oil a few days ago and another refinery had been selling all its fuel oil in the domestic market. "One refinery had 50,000 tonnes of fuel oil at Port Qasim, which it had imported a few weeks ago, but now Pakistan State Oil (PSO) has been approaching it to buy the product for the power plants." According to oil export data, the country exported over 160,000 tonnes of fuel oil in December, the highest monthly figure, taking the total export of fuel oil to 460,000 tonnes in the first half of the current fiscal year. The low consumption of fuel oil had increased in every month of this fiscal year, but the export will fall in January, officials said.

Overall production of petroleum commodities has witnessed an increase of 6.49 percent during the first five months of the current financial year 2023-24 as compared to the corresponding period of fiscal year 2022-23. POL products that showed positive growth include Kerosene Oil the production of which increased by 6.40 percent during the months under review, Pakistan Bureau of Statistics (PBS) reported. Similarly, the production of Motor Spirits, High-Speed Diesel, Diesel Oil NOS, Furnace oil, and Liquefied Petroleum Gas (LPG) witnessed an increase of 5.18 percent, 12.52 percent, 40.08 percent, 14.73 percent, and 4.43 percent respectively. However, the production of Jet Fuel Oil has decreased by 12.45 percent, Lubricating Oil 35.65 percent, Jute Batching Oil 20.49 percent, Solvent Naptha 3.62 percent, and petroleum product NOS 11.78 during the months under review. On a year-on-year basis, petroleum production has witnessed an increase of 2.77 percent during November 2023 as compared to the output of November 2022.