Attock Refinery Limited: Great Heritage- Greater Vision

Attock Refinery Limited (ARL) is a member of the Attock Group of Companies, the only fully integrated Group covering all segments of oil and gas industry from exploration, production and refining to marketing of petroleum products, besides being also engaged in power generation, manufacturing and trading of cement and other entrepreneurial activities. ARL is strategically located up-country and caters to the petroleum products requirements in its region of location.
Since its commissioning in 1922, ARL has passed through various stages of transformation and has stood the test of time through war and peace. From Batch distillation stills of 2,500 Barrels Per Day (BPD), today it has grown into a modern state-of-the-art refinery with a capacity of 42,000 BPD.
ARL was incorporated as a private Limited Company in November 1978 to undertake the business of The Attock Oil Company Limited (AOC) relating to refining of crude oil and supply of refined petroleum products. It was subsequently converted into a Public Limited Company in June 1979 and is listed on the three Stock Exchanges of the country. The Company is also registered with the Central Depository Company of Pakistan (CDC).
Strategically located at Rawalpindi, ARL's configuration allows it to process from the lightest to the heaviest (23-65 API) Crudes to produce a complete range of Petroleum Products from LPG to Asphalt including specialty products such as Jet Fuels (Jet A-1, JP-8) Cutback Asphalts, Polymer Modified Bitumen, Mineral Turpentine Oil, Jute Batching Oil and Solvent Oil.
ARL is receiving and processing crude from Northern and Southern oil fields of Pakistan. Crude is received both through pipeline and road bowsers. ARL is the only refinery processing all the Heavy Crude produced in the country.
It all began in 1922, when two small (2,500 Barrel per day) "Stills" came on stream at Morgah. The setting up of these facilities followed the first discovery of oil at Khaur where drilling started on January 22, 1915 and at a very shallow depth of 223 feet 5,000 barrels of oil flowed. Fortune turned in 1937 with the discovery of oil in Well No 7 at Dhulian. As the crude availability and the demand for petroleum products in the area has increased, so has the capacity of the refinery. The capacity of the refinery was increased in 1981 by the addition of two Distillation units of 5,000 and 20,000 BPD capacity each. Another major expansion and upgradation project was completed in 1999 with the installation of Heavy crude Unit of 10,000 BPD and a Catalytic Reformer of 5,000 BPD. A Captive Power Plant with installed capacity of 7.5 Megawatt was commissioned in 2000.
Value Addition:
ARL is in continuous search for value-added products and has produced and supplied Polymer Modified Bitumen (PMB), which is the first venture of this kind in the country and in line with our long term commitment for bringing innovation to our valued customers, ensuring durability and maintainability of Pakistan's roads in the process. ARL has also successfully added JP-8 to its range of Jet fuels production, which already includes JP-1.
ARL is supplying Unleaded Gasoline, Low Sulfur Diesel and Low Sulfur Furnace Oil to the market in line with its policy of producing more environment friendly fuels. ARL is now targeting low benzene and low aromatics gasoline production.
Exports:
ARL is exporting Petrochemical grade Naphtha to Singapore, Middle East, etc.
Contribution to the National Economy of Pakistan
ARL is enormously contributing towards the economy of Pakistan as under:
Supply of petroleum products to Civil and Defense establishments including Airlines, Railways, Power stations, Cement and other industries.
Providing an outlet to indigenous produced crude oil in Pakistan and particularly from the Northern fields.
Generation of government duties/taxes on supply of petroleum products. Generation of foreign exchange earnings through petroleum products exports. Providing employment and work opportunities in the Refinery including deployment of large transportation fleet for crude oil and products movement.
ARL & Best Business Practices
At ARL, we are committed to follow the highest standards of ethical business practices. Our actions are governed by the values and principles that we share. We have committed our self to conduct the business in an honest, ethical, transparent and legal manner.
ARL ensures full compliance with:
1. Code of Corporate Governance issued by the Securities & Exchange Commission of Pakistan.
2. ARL's Statement of Ethics and Business Practices
3. ARL Core Values and
4. Code of Practice for Gender Justice at the workplace.
ARL compliance with the Best Business practices is evident from the following awards/recognitions received from various national and international prestigious institutions.
-- Best Corporate Report Award.
-- Country's Premier Corporate Excellence Award.
-- Exporter of Petroleum Products Award.
-- Environment Excellence Award.
-- Corporate Social Responsibility (CSR) Award.
-- Gender Justice Award.
-- International PLATTS Global Award.
-- People as a key Resource Award.
-- Best Sustainability Report Award.
-- Global Compact Responsible Business Award.
-- HR Recognition Awards.
-- Corporate Social Responsibility (CSR)
ARL promotes CSR as part of its core values to create the foundation for a more equitable, just, productive, competitive and knowledge-based environment. ARL history of over 85 years is replete with CSR initiatives. ARL's activities in this domain are distinguished from others on account of the innovative and sustainable nature of its CSR initiatives socially, economically and environmentally. ARL's priority areas for CSR activities are health, education, women and youth development, environment, provision of potable water and poverty alleviation. Investing in the communities in which we operate is not just a demand that must be met; it is a philosophy that we adhere to. ARL, therefore, places tremendous emphasis on contributing to the well being of the communities in which we operate. We continue to undertake community projects in consultation with local communities and administrations.
ARL's CSR Initiatives whether in the field of environment, health care, development of women skills, alleviation of poverty; or conservation of rich biodiversity are all sustainable in nature.
Diversification and Expansion Plans
ARL's management is committed to:
1. Increasing refining capacity;
2. Providing environment friendly and high quality petroleum products;
3. Clean, pollution free production practices; and
4. Diversification.
ARL is in the process of installing a Pre-flash Unit of 10,400 BPD to enhance its existing distillation capacity and with the addition of a new heater on HBU-II which will further enhance the capacity by 1,000 BPD, the total distillation capacity of the Company will increase to 53,400 BPD. The Pre-flash Unit will cater for the expected crude discoveries in the region. Further to upgrade the quality of PMG, the Company is also installing an Isomerization Unit which will enable the Company to produce more environment friendly motor gasoline.
Problems & Challenges for Refining Sector in Pakistan
The refineries Import Parity Pricing Formula was modified with effect from July 1, 2002 whereby the minimum rate of return of 10% on paid-up capital was dispensed with and net profit after tax from refinery operations (if any) above 50% of the paid-up capital at that time is required to be diverted to a special reserve to offset any future loss or make investment for expansion/up-gradation of the Refinery.
Since then, the Government has been unilaterally making modifications in the pricing formula from time to time with negative impact on the refineries profitability with last modification was made by the Government, under severe public pressure by cutting deemed duties and revise the motor gasoline pricing formula on an irrational unitary method basis in August 2008. These unilaterally changes in the pricing formula for the refineries have resulted in serious erosion of the Country's Refining sectors and hampered their continued operations at full capacity. It would further affect the Refining sector's capability to undertake projects for up-gradation and expansion of the Refinery industry in Pakistan.
The Refineries in Pakistan have been actively engaged in joint representations to and deliberations with the Government to negotiate a revision in the pricing formula to ensure that refineries operations are conducted on an economically sustainable basis and protect the investors' interest. However, despite detailed deliberations over the last 1 _ years, regrettably the Government has not been able to finalise as revision in the pricing formula that would address the refineries concerns, although the Ministry of Petroleum & Natural Resources has been submitting various proposals to Economic Co-ordination Committee (ECC) for approval.
Additionally, the issue of Corporate Circular Debt which is prevailing in the Oil industry for more than 2 years has further aggravated and poses a serious threat to the Petroleum sector companies carrying out their day to day operations. Unless this issue is resolved on a priority basis, it would ultimately lead to an imminent closure and suspension of oil supplies.
Despite Government assurances from the Government authorities, ARL receivables from Pakistan State Oil Company Limited (PSO) stand at Rs 32. 857 Billion as at November 30, 2010 thus hampering its operations but also let to the defaults in making payments to its crude suppliers.
The refineries have emphasised upon the Government that a revision in the pricing formula and settlement of Circular debt are extremely essential in order that the refineries are able to maintain their normal operations to continue supplying petroleum products to the domestic market including strategic defence supplies, provide an outlet to local crude oil production as well as to safeguard the investors interest in the oil refinery sector.