Karachi: PSO has embarked on a mission to strengthen the petroleum products’ supply line by maximizing fuel purchasing from local refineries and local fuel oil blenders as part of the new vision.
In the pursuit of this objective, the company has recently entered into sale purchase agreement and renegotiated its contract with two refineries namely BYCO Petroleum and PARCO and one local fuel oil blender ie Bakri Trading Company.
Among the agreements, the most significant agreement was signed by PSO and Byco. Accordingly the sale of petroleum products from Byco to PSO will substitute equivalent volume of imports being presently made by PSO particularly of products such as PMG, HSD and HSFO.
Byco Oil Pakistan Ltd and Pakistan State Oil have signed a product sale & purchase agreement. The SPA between the two entities will ensure guaranteed sale of 65 percent of Byco’s production of various petroleum products from its new 120,000 bpd refinery to Pakistan State Oil.
The initiative will benefit the national economy by reducing the nation’s dependence on imported oil products, reduce foreign exchange expenditure, encourage foreign investment in the domestic energy sector and maximize local refineries’ through-put. In the recent agreements signed by the company, the payment modalities will involve PSO opening Letters of Credit (LC’s) for its suppliers.
However, this arrangement can only be sustained if back to back LC’s from the power entities are ensured to PSO so that the payment cycle in the energy sector is streamlined and accumulation of further debt is minimized.
The agreement was inked by Naeem Yahya, Managing Director, Pakistan State Oil and M. Qaiser Jamal, Country Business Head, Oil Refining, Byco Oil Pakistan Ltd.
Byco’s new oil refinery with a crude oil processing capacity of 120,000 bpd is expected to attain mechanical completion by end June 2012. This would be followed by pre-commissioning and commissioning activities leading to commercial operations by 4th quarter 2012. Along with the existing 35,000 bpd refinery, the commissioning of the new refinery will make Byco the single largest crude oil refiner in the Country.
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