Karachi, May 22, 2012 (PPI-OT): Byco Oil Pakistan has entered into a Sale and Purchase Agreement (SPA) with Pakistan State Oil (PSO), according to which PSO would ensure a sale of 65% of production from Byco’s new refinery, capable of processing 120,000 bpd of crude oil.
According to Alfalah Securities Limited, the agreement of PSO with Byco would enable the largest oil marketing company to reduce the import of petroleum products such as Motor Spirit, High Speed Diesel and High Sulphur Furnace Oil. Byco would sell petroleum products to PSO against a confirmed Letter of credit thus ensuring timely payment of dues and ruling out the possibility of a circular debt formation.
Byco’s new refinery is likely to accomplish mechanical completion by the end of June 2012 and is expected to achieve commercial operations by 4QCY12. The commissioning of a new oil refinery, with an existing capacity to process 35,000 bpd of crude oil, would make Byco the largest crude oil refinery in the country. Alfalah Securities Limited believes that the initiative taken by PSO and Byco would be an important step in reducing the dependence of the country on imported petroleum products, resulting in saving significant foreign exchange reserves while increasing the capacity utilization of refineries. For this purpose, PSO has also entered into another SPA with PARCO and a local fuel oil blender, Bakri Trading Company.