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PERAC's role in the development of NRL.

The dawn of independence, in 1947, also brought Pakistan face to face with a formidable challenge to build up its own industrial base which barely existed at that time. With a seriously handicapped inheritance to start with, Pakistan's economy passed through hard time during the last four decades. As the result of almost total absence of industrial infrastructure at the beginning, the petroleum refining and petrochemical industries, so complex and capital intensive in nature, remained undeveloped in Pakistan for quite some time. At the inception of Pakistan, there was only one small oil refinery at Rawalpindi, processing 10,000 BPD of locally produced crude oil and could meet only 10 per cent of POL requirements of the country. The balance 90 per cent had to be imported by utilizing a substantial part of the foreign exchange earnings of the country.

The petroleum refining industry was started in this part of the subcontinent by the Britishers in 1939, bu putting Attock Refinery Limited (ARL) at Rawalpindi, but this refinery could not be expanded, till recently, due to limited crude oil production in the northern area of the country. The first modern fuel refinery, the Pakistan Refinery Limited (PRL), was built by expatriate companies in Karachi in 1961 to process 2.5 million tons/yr of imported crude oil. The National Refinery Limited (NRL) was the first modern lubricants refinery established by a Pakistani private sector in 1966. It was nationalized under the Economic Reforms Order (ERO) of 1972 by the Government of Pakistan with the objective |to develop petroleum refining and petro-chemical industries in the country in the public sector'. This necessitated the incorporation of State Petroleum Refining & Petrochemical Corporation (Pvt.) Ltd. (PERAC), in March 1974, as the holding corporation for the current and future statecontrolled industries in this vital sector. NRL, after nationalization under the ERO 1972, was the first company to be placed in the charge of PERAC. PERAC has since emerged as one of the major corporations of the public sector, working under the Ministry of Production.

At the time of formation of PERAC, it inherited only as small 0.5 million tons/yr oil refinery (Lube-l) of National Refinery Limited (NRL) which was set up in 1966 by Amin Group of companies for a total investment of Rs. 10 crores. Ever since then PERAC has played as significant role in oil refining and petrochemicals sector by expanding NRL from 0.5 million tons to 3.2 millions tons of crude oil processing capacity.

As a result of PERAC expansion policy NRL has turned into a biggest and most integrated refining complex ery of the country, both in terms of capacity and complexity of refining the technology. The oldest refinery of NRL complex which was inherited by PERAC had the total crude oil processing capacity of 0.5 million tons/yr, producing 75,000 tons/yr. of lube base oil, 100,000 tons/yr of asphalt and the fuel products. This refinery was debottlenecked later on to enhance its crude process capacity to 0.65 million tons/yr to increase the production of lube base oil to 10,000 tons/yr. To cater for the growing requirements of Fuel products in the country, Fuel Refinery with a capacity of 1.5 million tons/yr of crude oil was set up in 1977 with the assistance of Industrial Export Import of Rumania for a total investment cost of Rs. 80 crores. This refinery produces almost entire range of fuel products namely LPG, Motor Gasoline, Jet Fuels, Kerosene, Diesel Oils and Furnace Oils.

To meet the growing requirements of Lube base oil/asphalt products, another refinery (Lube-2) was set up to produce these products at a total cost of Rs. 200 crores to produce additional 100,000 tons/yr of Lube Base Oils and 110,000 tons/yr of asphalt by using the surplus furnace oil produced by NRL as its feedstock. Like Fuel refinery, Lube-2 was also designed and constructed by Industrial Export Import of Rumania, and it went on stream in 1985.

To cater for the defence requirements for the production of explosives and to meet the demand of other petrochemicals products in the country, an aromatics extraction plan for production of 25,000 tons/yr of Benzene, Toluene, and Xylenes (BTX) was set up in 1979 at a cost of Rs. 6.67 crores. This was the country's first petrochemical units which was integrated with the units of the Fuel Refinery for the production of high purity BTX products to meet the local requirements of these products in defence, pesticides, solvents, paints and varnish industries were also exported to earn valuable foreign exchange for the country.

The oil refineries are heavy consumers of energy. The original Lube-1 refinery of NRL was designed in 1965. Whereas the fuel refinery was designed during 1974-75. The energy cost during these years was cheaper and there was no incentive to recover waste heat by addition of energy conservation equipments. With the sharp escalation of crude oil and petroleum products prices during 1979-81 it became imperative that refineries set-up during the decade of 1960-70 should be modernized by installing energy conservation equipments. Consequently, with the objective to operate the refineries efficiently at optimum capacity with minimum energy cost, a contract was awarded in October 1983 to Stone & Webster Corporation of USDA to conduct Energy Management Audit Conservation Study. The scope of study included a general audit of major process units and equipments of NRL to identify the potential areas for significant energy conservation. Stone & Webster Corporation of USA submitted its report in April 1984 highlighting the potential areas for energy conservation. It identified the following projects as the potential area of energy conservation in NRL processing scheme.

B&M of Crude Distillation

Unit of Fuel Refinery

This project envisaged the balancing and modernization of crude distillation unit of NRL Fuel Refinery to process 15,000 BPD of additional crude oil, conserve energy equivalent to 18,788 tons of fuel oil and save foreign exchange worth of $6.3 million/yr by reducing the import of deficit products.

Balancing & Modernization

of Platforming/Hydrobon Units

The project envisages balancing & modernization of Platforming/Hyrobon Units to process low value naphta to produce 28,000 tons/yr of HOBC and 1750 tons/yr of LPG which are deficit products in the country. The total cost of the project is estimated at Rs 13.68 crores including a foreign exchange component of Rs. 4.75 crores.

Co-Generation of Power

This project envisages to utilize Lube-II refinery bioler to generate 7.5 MW of electricity to meet needs of Lube-II refinery internally. The total cost of the project is estimated at Rs. 14.46 crores including a foreign exchange component of Rs. 8.57 crores.

Process Modification

at Lube Refinery

The scheme envisages process modification at Propane Deasphalting and MEK Dewaxing units of Lube Refinery in order to improve overall thermal efficiency of heat exchanging equipment and to improve yield of lube oil from slack waxes in which valuable oils are still untrained. The cost of the project is estimated at Rs. 5.02 crores including a foreign exchange component of Rs. 2.54 crores. These modifications will result in reduction of fuel oil consumption by about 4972 tons/yr and recovery and about 2400 tons/yr of lube base stocks.

The first phase of NRL B&M projects has been completed which envisaged the balancing & modernization of the existing crude distillation facilities by enhancing its crude processing capability from 50,000 to 65,000 barrels/day of crude oil. Products slate of this project includes LPG, Napthha, Korosene, High Speed Diesel and Furnace Oil, which are deficit in the country. The detailed engineering/design, procurement and construction of this project is done by ENAR Petrotech Services by utilizing its local resources of manpower and engineering skill. The major parts of the equipment were manufactured locally, with the exception of speciality equipment which were imported. The total erection cost of the project is Rs. 9.935 crores hwich remained within the stipulated cost of Rs. 12.53 crores. This project has been completed in the middle of February 1990 as per schedule and is already in operation. The other projects are under implementation. The EDS packages for these projects are complete. The selection of EPC contractor to undertake these project is in progress and its is expected that the construction work on these projects would start soon.

Approximately, twenty five petroleum products are now produced by NRL. These products can be classified according to their end uses as fuels, lubricants, asphalts, petrochemical, naphtha and speciality oil. Of the total petroleum products refined in the country, half of it came from NRL. The growth of NRL and establishment of these plants in the country have stopped/reduced the import of variety of petroleum/petrochemical products and thus saved substantial foreign exchange for the country over the years. The NRL complex now employs 900 personnel including officers for manning the operations of all its facilities including its imports and product disposal terminal at Keamari. NRL also maintained an elaborate training institute for their sophisticated technical operations.

Because of PERAC dynamic approach ever since of its inception, NRL with small investment of Rs. 10 crores in 1974 has now grown up into a major company in the petroleum refining and petrochemical field with a total investment of the order of Rs. 300 crores. On the other hand, another refinery in Karachi in private sector although established prior to National Refinery at an investment prior to National Refinery at an investment of Rs. 9 crores has not expanded and is still operating the same oil refining capacity. PERAC's expertise in designing, mobilizing resources, managing and operating complex refineries have now gained world-wise recognition and foreign companies are willing to invest in PERAC projects. PERAC has over a period of 16 years has made contributions to the industrial development of Pakistan by putting up projects with a value of more than Rs. 400 crores (inclusive of NRL) which is likely to go as high as Rs. 1100 crores in very near future. It has successively been introduing new technology in Pakistan in the field of petrochemical and petroleum refining.

The petroleum and petrochemical industrial in a relatively low oil producing and developing country like Pakistan is expected to face another challenging situation in the near future. The prices of crude oil and petroleum products, although presently somewhat depressed from the high levels of 10 years ago, are likely to rise again in the long term as its supply starts falling short. Pakistan has to be geared to optimize the barrel of crude oil and to tailor refinery outputs as nearly as possible to match demands patterns. It has to be in a position to indigenously design, engineer and fabricate the plant and equipment to attain self-sufficiency in this important area. State Petroleum Refining & Petrochemical Corporation Limited is aware of these challenges and has taken steps to meet them by various plans as discussed above.

Because of PERAC dynamic approach ever since of its inception, NRL with small

investment of Rs. 10 crores in 1974 has now grown up into a major company in the petroleum refining and petrochemical field with a total investment of the order of Rs. 300 crores. On the other hand, another refinery in Karachi in private sector although established prior to National Refinery at an investment of Rs. 9 crores has not expanded and is still operating the same oil refining capacity. PERAC's expertise in designing, mobilizing resources, managing and operating complex refineries have now gained world-wise recognition and foreign companies are willing to invest in PERAC projects.
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Title Annotation:State Petroleum Refining and Petrochemical Corporation Ltd.; National Refinery Ltd.
Author:Chaudhry, M.H.
Publication:Economic Review
Date:Oct 1, 1991
Words:1949
Previous Article:33 years of water and power development in Pakistan.
Next Article:PSO fulfills economic needs of Pakistan.
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