Byco building Pakistan’s Biggest Refinery

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Byco building Pakistan’s Biggest Refinery

June 14, 2010

June 10 — Byco Petroleum Pakistan Ltd., the country’s smallest refiner, will start the nation’s biggest oil- processing unit by December to take advantage of rising demand and a proposed deregulation in pricing, the chief executive officer said.

The refinery, which cost $450 million and is being assembled after arriving from the United Kingdom, will have the capacity to process 120,000 barrels a day, Amir Abbassciy said in an interview in Karachi yesterday evening. It will be located at the site of the existing facility on Pakistan’s coast in the western province of Baluchistan.

Demand for petroleum products is rising as South Asia’s second-biggest economy after India is forecast by the government to expand 4.5 percent in the year starting July 1, the fastest pace in three years. Consumption of oil products rose 7 percent to 18.6 million metric tons in the 11 months ended May 31, according to KASB Securities Ltd. in Karachi.

The new oil processor will help reduce the gap between demand and supply, said Mohammad Fawad Khan, research analyst at KASB Securities. Demand, which is rising at an annual pace of 5 percent, exceeds supply by 8 million metric tons a year, he said.

Byco’s existing capacity will be increased to 34,000 barrels a day from 30,000 by the end of June, said Abbassciy, 42, who is also chairman of the company.

Pak-Arab Refinery Co., jointly owned by the governments of Pakistan and Abu Dhabi, is the biggest refinery in Pakistan, producing 100,000 barrels a day, according to its website.

Pricing Policy

Pakistan may deregulate the pricing of petroleum products, allowing refiners to determine rates, according to a proposal by the petroleum ministry. Oil & Gas Regulatory Authority, a government agency, currently determines rates.

“Pricing should lie with the refiners, the government should not be involved,” Abbassciy said. “In the future, those refineries which have their own retail networks will have an edge.”

Byco is spending 4 billion rupees ($47 million) to more than double its network of retail fuel outlets to 240 in the next year, which may help the company report a profit. Its net loss narrowed to 368.2 million rupees in the three months ended March 31 from 1.21 billion rupees a year earlier. Sales rose to 10.4 billion rupees from 4.2 billion rupees.

Shares fell 5.5 percent to 9.25 rupees as of 1:15 p.m. local time on the Karachi Stock Exchange. The stock has fallen 2.6 percent this year, compared with a 1.1 percent gain on the Karachi 100 stock index.

Abraaj Capital Ltd., the Dubai-based private equity firm, owns a 40 percent stake in Byco Petroleum. June 10, 2010, 4:23 AM EDT By Farhan Sharif and Khurrum Anis

–With assistance from Khaleeq Ahmed in Islamabad. Editors: Naween A. Mangi, Ravil Shirodkar. To contact the reporters on this story: Farhan Sharif in Karachi at fsharif2@bloomberg.net; Khurrum Anis in Karachi at Kkhan14@bloomberg.net. To contact the editor responsible for this story: Stephen Foxwell at at sfoxwell@bloomberg.net.(Bloomberg)

Byco building Pakistan’s Biggest Refinery