Attock Refinery Limited (PSX: ATRL), the sole refinery in northern Pakistan, has announced the temporary closure of two units due to low product lifting by oil marketing companies (OMCs), leading to an accumulation of high petrol and high-speed diesel stocks.
In a notice to the Pakistan Stock Exchange (PSX) on Tuesday, ATRL revealed that the dispatch pattern for December remained depressed, resulting in significant stockpiles of Premier Motor Gasoline (Petrol) and High-Speed Diesel (HSL) with minimal or no ullage in storage tanks, particularly for petrol.
To address the challenge of high product stocks, the refinery has temporarily shut down two crude distillation units to manage operations, operating at around 60% throughput. This reduction in throughput, if sustained, could lead to a curtailment of crude intake from oilfields, adversely affecting associated gas production, according to the notice.
ATRL also informed the Oil and Gas Regulatory Authority (OGRA) about surplus inventories in the market available to meet demands.
It’s noteworthy that reports of Attock Refinery’s potential shutdown due to increased product stocks and reduced lifting by OMCs circulated in the media last week. However, the company officially informed investors on Tuesday, resulting in a decrease in the company’s stock price. After the notification to the PSX, the share price rebounded by 1.81% to reach Rs 346.04.
Earlier in December, Attock Refinery CEO Adil Khattak wrote to the petroleum minister and the OGRA chairman, highlighting that OMCs were importing more petrol and diesel instead of lifting their allocated quotas from ARL. This practice resulted in high product stocks at the refinery, causing a monthly loss of Rs 700 million. Khattak urged the government to direct OMCs to prioritize local product lifting over imports, ensuring the refinery could operate at an optimum throughput.
ATRL’s management disclosed sales figures for the last four months, indicating that only 38% of petrol and 47% of diesel sold by OMCs in ARL’s sales envelope were lifted from ARL, while the rest was sourced locally or imported.