Appointment of consultant: Byco accuses PSO of delay tactics

Byco refinery has reportedly accused Pakistan State Oil (PSO) of delaying the appointment of a consultant for Asia Petroleum Limited (APL) pipeline despite clear directions from the Ministry of Petroleum, well-informed sources told Business Recorder.
"PSO is delaying the appointment of a consultant. Our concern is that time is passing and the start up scheduled date of 120,000 bpd capacity refinery is fast approaching," the sources added. APL owns an 84-km long pipeline, which runs between Zulfiqarabad Oil Terminal (ZOT) at Port Qasim and Hub Power Station (Hubco). This pipeline is used for transportation of furnace oil for Hubco, which is supplied by PSO. The fuel oil is imported at PQA and stored at ZOT by PSO. APL is a 49% subsidiary of PSO with management control whereas 51% rests with foreign individuals and companies.
Byco is located next door to Hubco in the Hub coastal area. The APL pipeline passes just 500 meters away from the oil refineries of Byco. With an existing oil refinery of 35,000 barrels per day (bpd) capacity already running, Byco is setting up another oil refinery of 120,000 Bbls per day capacity on the same site at Hub Balochistan. The new oil refinery is presently under construction and is planned for commissioning in 2nd quarter of 2011. This will be the largest oil refinery of Pakistan.
Oil products from the Byco's refining centre will include over 1.0 million tons of Petrol (M.S), 2.0 million tons of HSD and Furnace Oil (Fuel Oil) each. Reductions in import of M.S and HSD by 50% and furnace oil by 25% with a substantial saving of foreign exchange will be achievable after commissioning of this new refinery.
It has been worked out that if the product is moved by road then this would require a total of 231,000 bowzer trips in a year for the movement of entire volume of HSD and furnace oil from Byco refineries, which will not only be practically difficult but will also be highly energy inefficient and would pose great traffic and environmental hazards. An estimated cost for this inefficient mode of transportation would be US $21 million or Rs 2 billion annually only on account of fuel consumption while environmental and traffic hazard associated with road movement are an additional cost to the country.
To resolve the logistic issue Byco has proposed to the Ministry of Petroleum, PSO and APL to consider utilisation of APL pipeline for the movement of HSD and Furnace Oil from Byco. This proposal entails usage of APL pipeline for transportation of finished petroleum products in two directions simultaneously: furnace oil can go to Hubco on PSO's account as usual in one segment and HSD to Zulfiqarabad Oil Terminal on various OMCs account including PSO in the second segment of the pipeline. From ZOT, HSD can further move into WOPP for upcountry, the sources added.
Byco has proposed to lay a 500 meter long spur line from its refinery to connect with the APL pipeline. This way APL's pipeline could be utilised for furnace oil from Byco to Hubco in one segment. Entire requirement of Hubco's Furnace Oil will be supplied by Byco on PSO's account through APL's pipeline via this spur line.
Another proposal is that 500 meter long spur line be laid from Byco to the APL pipeline for transporting Byco's white products, mainly HSD, from Hub to ZOT via APL's pipeline. The movement of HSD will be on respective OMCs account the way it is done in the case of WOPP.
The proposal has been under discussion amongst the parties (Ministry of Petroleum, PSO, APL, Byco and Hubco) for quite some time now. In this process, the Ministry of Petroleum has asked Byco and PSO to jointly appoint an independent consultant to study legal and technical aspects of the proposal and furnish recommendations to the Ministry within a month's time. At present the process of appointment of consultant is in progress. However there are certain elements who reportedly are delaying the process.
Originally the APL pipeline project was being set up to support two projects, namely Hubco and Fauji Electric Power Company Limited (FEPCOL). However, only one project materialised ie Hubco thus leaving sufficient surplus capacity in the APL pipeline which was laid down to meet the demand requirements of two power projects. The pipeline is guaranteed by GOP for a minimum take or pay throughput of 1.5 million tons/year for 30 years. APL's tariff is $12.5 per MT, which is extremely high for transportation of Furnace Oil for 84 kms.