Pakistan’s largest oil refinery shuts down.
Due to the shortage of crude oil because of the devaluation of the rupee and the deficiency of US dollars, Pakistan’s largest oil refinery has been shut down for approximately a week.
Cnergyico PK Head of Consumer Sales Syed Adeel Azam, in a letter to the Ministry of Energy (Petroleum Division) dated January 31, 2023, said “Cnergyico refinery (formerly known as Byco Petroleum) shall shut down from February 2, 2023 and will restart production from February 10, 2023 in line with our crude oil vessel arrival timeline”.
The refinery’s installed capacity for processing crude oil to create gasoline, diesel, furnace oil, and other petroleum products is 156,000 barrels per day.
“The industry is on the brink of collapse if immediate steps are not taken in respect of arranging financing to ensure imports,” Oil Companies Advisory Council (OCAC) said in a letter to the Oil and Gas Regulatory Authority (Ogra) late last week.
“Due to the increase in oil prices and successive depreciation of Pakistani rupee over the last 18 months, the trade finance limits available from the banking sector have become inadequate. As a result of the recent devaluation alone, the LC (letter of credit/ import) limits have shrunk overnight by 15-20%,” wrote OCAC.
“It is requested that the banking sector be immediately requested through the State Bank of Pakistan to enhance the limit of our member companies (including Cnergyico),” the letter added.
In October 2022, the refinery informed the stock market that recent rains had destroyed the roads and bridges linking it to markets.
Although they have chosen different paths, this is also resulting in significant losses in addition to those put on by the devaluation of the rupee.
The company’s share price decreased 3.18%, or Rs0.13, and ended Friday’s trading session at Rs3.72 with 7.49 million shares traded at the Pakistan Stock Exchange (PSX).
Due to higher oil prices and a significant devaluation of the rupee, the company’s net sales in the first quarter (July-Sept) of the current fiscal year were Rs52.7 billion as opposed to Rs34.4 billion in the same period last year.
“Extremely low refinery throughput resulted in a gross loss of Rs4.6 billion compared to the gross profit of Rs751 million in the same period of last year,” the company said in its first quarterly report.
