Category: Nieuws

Phillips 66, a renowned oil and gas company found on the NYSE, has recently received a boost in its price target. According to reports, JP Morgan Chase & Co. increased the price target from $112.00 to $120.00, much to the delight of both clients and investors alike.

With a potential upside of almost 25%, this boost could potentially lead to even greater profits for Phillips 66. This development follows on from their recent quarterly earnings report, which showed mixed results. The company reported earnings per share (EPS) of $4.00 for the quarter, missing out on the consensus estimate by a margin of $0.35.

While not quite hitting expectations with regards to EPS, Phillips 66 still displayed promising data regarding their revenue stream. During that particular quarter they generated a total revenue stream of $40.91 billion; an impressive feat when compared with an earlier estimate of $34.30 billion.

Phillips 66 conducts business through several sections or “segments,” including Midstream, Chemicals and Refining & Marketing Specialties. These segments each focus on different aspects of processing, transportation, storage and marketing of fuels and other related resources.

The Midstream segment offers crude oil and refined products transportation services as well as providing terminaling services and natural gas transportation alongside various processing and marketing services relating to liquefied petroleum gas (LPG). Meanwhile, the Chemicals division is responsible for producing such chemicals as styrene, polymers as well as aviation fuel among others.

Overall this is an exciting turn for shareholders and industry analysts alike who are hopeful that despite some hiccups along the way; Phillips 66 will come out on top when it comes down to continuing success in their area of operations moving forward into the future.

Phillips 66: Analyst Reports, Market Performance, and Business Operations

Phillips 66, a company that specializes in the processing, transportation, storage, and marketing of fuels and other related products, has recently been the subject of several reports by equities research analysts.

Morgan Stanley increased its price target on the company from $115.00 to $125.00 and gave it an “equal weight” rating in a report on Friday, January 20th.

Similarly, Royal Bank of Canada increased their price objective on Phillips 66 from $130.00 to $132.00 and gave the stock an “outperform” rating in a report on Wednesday, February 8th.

Meanwhile, UBS Group initiated coverage on Phillips 66 with a “buy” rating and a $139.00 price target for the company in a report released on Wednesday, March 8th.

However, Piper Sandler decreased its price objective on the company from $155.00 to $137.00 and set an “overweight” rating for it in a report published on Monday, December 19th. Finally, Mizuho decreased its price objective for Phillips 66 from $121.00 to $120.00 in its report released on Friday, March 10th.

According to data from Bloomberg, there are currently five investment analysts who have rated Phillips 66 as a hold and nine have given it a buy rating with an average consensus rating of “Moderate Buy”. The average price target for the company is at $121.80.

Phillips 66 currently holds a market capitalization of $44.64 billion with NYSE:PSX opening at $96.23 as of Tuesday’s trading session; having recorded a year low (2019) value of just over USD74 per share and another high value at just above USD113 per share respectively.

The Midstream segment provides crude oil and refined product transportation services while also offering terminaling and processing services alongside natural gas, natural gas liquids and liquefied petroleum gas transportation, storage, processing and marketing services. The company’s portfolio of products encompasses a variety of offerings that cater to the needs of various industries; from industrial customers to consumers.

In other Phillips 66 news, Director Gregory Hayes purchased 10,250 shares of the firm’s stock at an average cost per share of $97.75 in early February for a total transaction amounting to over $1 million. Given his recent acquisition, Director Gregory now directly owns 14,299 shares in the said company valued at $1,397,727.25.

Additionally, many hedge funds have recently made changes to their positions in Phillips 66’s business operations. Among these institutions are Wellington Management Group LLP which currently owns 7,188,087 shares worth $620,979k; Vanguard Group Inc whose total hold is currently valued at $4.09 billion across its over 50 million available shares.

The firm boasts strong fundamentals which have enabled it to navigate through challenging economic conditions with impressive results. Its PEG ratio is one of the lowest within its peer group and with notable initiatives aimed at expanding its reach globally leveraging on its Midstream segment capability among others there is much optimism surrounding its prospects for shareholders both existing and prospective.

Best Stocks by Ronald Kaufman, April 4, 2023

Earlier this month, as the market leader in data insights, market research and data intelligence in the energy sector, Insights Global was present at the StocExpo and the Tank Storage Awards Gala. 
 
It was a productive week, meeting many clients and partners in the ecosystem and the icing on the cake was that Insights Global won 2 Bronze Awards:

✓ Our CEO Patrick Kulsen won the ‘Outstanding Achievement Award’ (award for an individual who has gone above and beyond to ensure the success of a company and impact in our market).

✓ And we won a Bronze Award in the category ‘Terminal Optimisation’ for our Vessel Clearing Tool Service (an award for the software, service, or model that succeeds in optimising, streamlining, or improving the storage terminal).

We are grateful and want to thank everyone and especially the organization for a wonderful week and the recognition.

The largest U.S. refinery expansion in more than a decade has ramped up southeast of Houston at ExxonMobil’s Beaumont refining complex.

The $2 billion project, considered one of the largest in the world, bumped up capacity for transportation fuels by 250,000 b/d, to total 630,000 b/d-plus. The last big refinery expansion was in 2012.

“ExxonMobil maintained its commitment to the Beaumont expansion even through the lows of the pandemic, knowing consumer demand would return and new capacity would be critical in the post-pandemic economic recovery,” said President Karen McKee of ExxonMobil Product Solutions. 

“The new crude unit enables us to produce even more transportation fuels at a time when demand is surging. This expansion is the equivalent of a medium-sized refinery and is a key part of our plans to provide society with reliable, affordable energy products.”

The refinery is connected to pipelines from ExxonMobil’s Permian Basin operations. Permian crude is processed at the Beaumont refinery, where the company manufactures finished products, including diesel, gasoline and jet fuel. 

With the completion of the Wink-to-Webster crude line, which moves Permian oil to markets near Houston, as well as Beaumont pipelines, the new crude unit is positioned to further capitalize on segregated crude from the Permian Delaware sub-basin, where most of ExxonMobil’s production is underway.

As Permian oil output grew, construction on the Beaumont expansion began in 2019, involving 1,700 contractors. More than 50 full-time employees work at the expanded operations. 

ExxonMobil’s integrated operations in Beaumont also include chemical, lubricants and polyethylene production. More than 2,000 people work for ExxonMobil in the Beaumont area, with operations accounting for around one in every seven jobs in the region.

Meanwhile, Calgary-based affiliate Imperial Oil Ltd. in January agreed to invest about $560 million to construct what could be the largest renewable diesel facility in Canada. The project at Imperial’s Strathcona refinery is expected to produce 20,000 b/d of renewable diesel, primarily from locally sourced feedstocks.

Through 2027, ExxonMobil plans to invest around $17 billion in lower-emission initiatives.

Natural Gas Intelligence by Carolyn Davis, March 24, 2023

After years of relative stagnation, Brazil is likely to resume investments in oil refining capacity.

On Friday, the national energy policy council (CNPE) revoked a resolution that established guidelines for the divestment of federal oil company Petrobras’ refining assets and made the expansion of infrastructure to guarantee national fuel supply a strategic goal.

Brazil’s refining park comprises 19 refineries with processing capacity of about 2.4Mb/d (million barrels a day), which is insufficient to handle the 3Mb/d of oil produced. 

Professor Adilson de Oliveira, a member of the board of trustees of the UFRJ federal university, said a country like Brazil, which is heavily dependent on oil products, cannot rely on imports while it increases its exports of crude. 

“We pay freight and insurance to import the refined petroleum that we export. We burden our population with this absurd incompetence,” Oliveira told BNamericas.

In recent years, the hike in fuel prices contributed to Brazil’s inflation and ended up generating friction between previous president Jair Bolsonaro and Petrobras’ management, leading to the resignation of three CEOs.

Currently, according to the government, the state-run firm’s refineries operate at below the rate at which they operated in the past.

“Whether by stimulating greater use of the installed refining capacity, or by expanding the national refining park, the focus now is on energy security, manifested through the search for reducing external vulnerability in the supply of derivatives,” said the mines and energy minister, Alexandre Silveira.

In 2019, Petrobras signed an agreement with antitrust authority Cade to sell eight refineries that accounted for about 50% of its capacity: Abreu e Lima (Rnest), Presidente Getúlio Vargas (Repar), Alberto Pasqualini (Refap), Gabriel Passos (Regap), Landulpho Alves (RLAM), Issac Sabbá (Reman), Lubrificantes e Derivados do Nordeste (Lubnor) and Paraná Xisto (SIX).

Only three of them (RLAM, now dubbed Mataripe), Reman and SIX were sold, to Mubadala Capital, Atem Distribuidora and Forbes & Manhattan, respectively. 

Lubnor has a sale contract signed with Grepar Participações, but the transaction is still being analyzed by Cade. 

The other plants that were part of Petrobras’ divestment program are now expected to remain in its portfolio, as the new federal administration of Luiz Inácio Lula de Silva considers that Petrobras must keep a verticalized profile. 

CAR WASH EFFECT

Alongside Comperj and the Premium I and II plants, RNEST was one of the refinery projects that Petrobras had been carrying out before the Lava Jato (Car Wash) corruption probe, launched in 2014 and which led to a halt in the works. 

Claiming it needed to invest in more profitable activities to reduce its debts and generate more dividends for shareholders, the firm has been focusing on exploration and production in deep and ultra deepwater assets, especially pre-salt areas.

After the election of Lula last October, the Workers Party leader’s energy transition team recommended that Petrobras modernize its refineries and resume halted construction works.

Petrobras’ current business plan, which is likely to be modified due to the change in the federal government, foresees US$9.2bn investment in the refining and gas & energy areas by 2027. 

PRODUCTION SHARING SUPPLY

Meanwhile, the CNPE decided that Pré-Sal Petróleo SA (PPSA), which oversees pre-salt production-sharing contracts, should start conducting studies into the technical and economic feasibility of mechanisms to prioritize the domestic supply of petroleum-based fuels.

The CNPE’s measure is based on a law that allows state-owned PPSA to sign contracts on behalf of the government to refine and process oil, natural gas, and other hydrocarbons arising from production-sharing contracts. 

Currently, all of the government’s oil is sold in its raw form, via the offshore production unit.

“We want the government’s oil and natural gas from production-sharing contracts to promote the industrialization of Brazil and ensure the security of national supply of energy, petroleum inputs, nitrogen fertilizers and other chemicals, reducing foreign dependence and valuing local content. Our companies need to prioritize the national supply,” Silveira said.

On Monday, PPSA said that production-sharing contracts set a new record in January, producing an average of 845,000b/d of oil, almost twice as much as a year earlier.

FUEL HANDLING CAPEX

Oil and gas watchdog ANP authorized last year investments of 1.15bn reais (US$220mn) in fuel handling infrastructure. 

Of this amount, approximately 665mn reais will be invested in terminals, 126mn reais in oil pipelines and 341mn reais in gas pipelines.

During 2022, investments of around 400mn reais were made in the segment, mostly for transportation or transfer pipelines.

The availability of fuel storage in Brazilian terminals increased by about 175,000m3 last year. 

Authorizations issued by the ANP in 2022 involved gas liquefaction units on behalf of New Fortress Energy in São Paulo and Bahia states; fuel tanks for Ultracargo in Maranhão; ship-to-ship operations for Braskem in Rio Grande do Sul; NTS’s Gasig pipeline in Rio de Janeiro; oil pipelines for Refinaria de Manaus; and a gas compression station for Vibra Energia in Espírito Santo.

By bnamericas, March 22, 2023

Oil markets have been affected by financial market challenges, inflation, and the war in Ukraine. Nevertheless, Arab Gulf countries remain resolutely optimistic, evidenced by new refinery and storage plans being developed in Iraq and the UAE.

This week, Iraqi minister of oil Hayan Abdul Ghani said that Baghdad has invited investors to set up seven new oil refineries throughout the country. Ghani said also that bidding has opened for three refineries today, while offers for three other ones are expected on April 2.

Ghani also reiterated that the new investments “constitute a shift in the government’s strategy towards encouraging foreign investment in oil refining and opening new horizons for international companies and the local private sector in this industry”. Sources have indicated that the first three refinery projects entail a 50,000 bpd refinery in the Southeastern Maysan Governorate, a 70,000 bpd refinery in the Nineveh Governorate in North Iraq, and a 30,000 bpd refining unit in Basra.

The April 2 offers are for a 50,000 bpd refinery in the Southern Dhi Qar Governorate, a 100,000 bpd refinery in Wasit (East Iraq), and a 70,000 bpd refinery in Muthanna (South Iraq). The seventh refinery project is slated to be for a 70,000 bpd refinery in the Western Al Anbar Governorate. 

The refinery expansion strategy comes at a time when Iraq is still struggling to adhere to its OPEC quotas. State-owned Iraqi oil marketeer SOMO reported that in February 2023, Iraq produced around 4.34 million bpd, a small change from the previous month, and still 92,000 bpd below official OPEC quota levels. 

In January 2023 production levels also were around 100,000 bpd below OPEC production quota, while December 2022 levels were at 4.43 million bpd. The main underlying reason for the current low production levels is the maintenance work taking place at the 400,000 bpd West Qurna 2 oil field. The shortfall however contradicts official statements made in January 2023 that other Iraqi oilfields would be able to compensate for lower production at West Qurna 2.

A more positive development this month is the rapprochement between Baghdad and the KRG, which have been at loggerheads about oil revenues from Iraq’s northern oil operations. According to Iraqi PM Mohammed Shia’ Al Sudani, Baghdad and the KRG government have reached an agreement to end the Baghdad – Erbil dispute over the Kurdistan region’s oil revenues.

Al Sudani stated to the press that the Kurdish oil revenues will be put in a single account that both the PM and the Kurdistan PM will have control over.

And the stakes in Iraq’s north are huge. Often dubbed as one of the last oil frontiers, the lifting cost for oil remains the lowest in the world at around U$2-3 per barrel, on a par with that of Saudi Arabia, and reserves are vast.

Genel, a major partner working in the Kurdish region oil and natural gas industry, has reported that year-end 2022 gross 2P reserves at its Tawke license (Genel holds 25% working interest) are 327 million barrels.

According to DeGolyer and MacNaughton international petroleum consultants, production was 39 million bpd in 2022 with an upward technical revision of 9 million barrels.

Through implementation and observation of the performance of phase 1 of the Tawke field Enhanced Oil Recovery (EOR) project, 11.7 MMbbls out of 23.3 MMbbls were moved from 2C resources into 2P reserves.

Meanwhile, at its Taq Taq concession (44% working interest, joint operator), gross 2P reserves are 24 million barrels as of end-2022 (26 million barrels at end-2021) after producing 1.6 million barrels according to McDaniel & Associates independent assessment.

And at its Sarta concession (Genel 30% working interest, operator) Genel’s estimate for gross 2P reserves is 9 million barrels at the end-2022 mark (32 million barrels at end-2021) following production of 1.7 million barrels after evaluation of results from appraisal wells and pilot production.

At the same time that Iraq is looking to give its downstream industry a nudge, the UAE’s plan to create a global oil hub at Fujairah looks much brighter. The Emirate hub is facing pressure due to the increased influx of Russian oil volumes, which has resulted in a strain on available storage and transit options. European markets have banned Russian oil, and Moscow has redirected its flows to Asia, providing an opportunity for Fujairah and other Emirati parties to take advantage.

VTTI Fujairah Terminals commercial manager Maha Abdelmajeed stated at the Fuel Oil Forum (FUJCON) that the terminal has seen a significant influx of Urals and naphtha, which he expects to last in the near future.

However, existing tanks are already full, indicating that Fujairah’s storage capacity of 1.1 million cubic meters has been reached.

Vessel data from 2022 shows that Fujairah has received around 12,500 vessels, with total volumes up by approximately 10%. The Port of Fujairah’s BD Manager, Martijn Heijboer, expects a healthy appetite for new transit volumes and storage demand.

Additionally, Fujairah is set to commission a dry bulk export facility soon, which will add approximately 18 million tons of aggregate handling capacity in Dibba. By 2050, methanol and LNG are projected to have the top market share of alternative bunker fuels at Fujairah, followed by biofuels and ammonia.

With these developments, Fujairah is expected to be well-positioned to become one of the world’s largest bunkering hubs.

OilPrice by Cyril Widdershoven, March 22, 2023

The global liquefied natural gas (LNG) storage tanks market is projected to grow to $20.8bn by 2027.

LNG is seeing a boom in demand, driven by the transition to a lower-carbon economic system and heightened need for energy security following Russia’s invasion of Ukraine. In 2022, the global LNG storage tanks market was estimated to be $14.5bn.

LNG storage tanks, used to store LNG at cryogenic temperatures, are essential for the safe and efficient transport and storage of LNG. Both single containment and full containment vessels are used globally.

Over the last few years, the global trade of LNG has steadily increased, setting a record of 516bcm in 2021.

The worldwide increase in LNG trade has been caused by an increase in the number of liquefaction plants, and sudden increase in the number of plants among European countries, such as Germany, which have been rapidly brought online in direct response to the recent war and sanctions against Russia.

The increase in LNG trade worldwide is because of higher production at new liquefaction plants in Australia, the US, and Russia.

LNG is a clean source of energy; and with increasing environmental regulations, globally, the use of natural gas and LNG as marine fuels is increasing. An increase in the global liquefaction capacity and LNG import has enabled robust growth in LNG consumption.

Global LNG regasification is increasing every year. Regasification is the process of converting liquid LNG at -259°F back to a natural gas at the atmospheric temperature.

Currently, Japan has the world’s largest LNG regasification capacity at 211.4 million MT per year.

Two new regasification terminals were added in the new markets of Bangladesh, and Panama, which started receiving LNG supply in 2018. This, in turn, is responsible for the increase in demand for LNG storage tanks.

Global regasification is increasing every year. A number of key industries are driving the increasing need for gas storage, such as metal processing (especially the steel industry). LNG is also being used by heavy transport industries, such as trucking and in large ships.

gasworld by Vaughn Entwistle, March 22, 2023

Companies in Africa are eying investments in refinery upgrades and building new plants to meet more stringent specifications that are gradually being enforced throughout the continent and to avoid closures, according to panelists at the ARDA conference in Cape Town March 13-17.

A number of refineries have closed in recent years, including Zambia’s Indeni and South Africa’s Engen. Meanwhile South Africa’s Sapref and PetroSA have been mothballed while others remain idle, such as Ghana’s Tema and Cameroon’s Limbe.

Indeni halted in September 2020 and the closure was announced in December 2021. Engen closed in 2020 and is being converted into a terminal. Sapref was mothballed in 2022, and while the owners had aimed to find a buyer, a subsequent flooding of the site has made such option very unlikely, according to panelists.

Part of the reason cited for the closures was more stringent specifications.

In North Africa, Algeria is building the Hassi Messaoud refinery, while Egypt is carrying out upgrades at Assiut, El Nasr and Suez and building a 45,000 b/d CDU at Midor, panelists said.

There was a focus on the expected startup of Nigeria’s mega Dangote refinery. In Nigeria, NNPC’s three refineries — Kaduna, Port Harcourt and Warri — have all started repairs. The old Port Harcourt refinery was expected to come back onstream in the second quarter.

Meanwhile, Sonangol has been progressing with the construction of three greenfield refineries in Angola — Cabinda, Lobito and Soyo — and has also been considering an expansion of its Luanda refinery. Once the new refineries are commissioned, Sonangol expects to operate at around 425,000 b/d refining capacity.

Ghana’s new refinery, being built by the Sentuo Group, was expected to come online later this year or early 2024.

Uganda is expected to make the final investment decision on its Albertine Graben refinery in June.

Senegal’s SAR is looking at the expansion of its refinery, and Ivory Coast’s SIR is investing in expanding and also building new units which will help it improve the quality of its products.

In Gabon, Sogara is considering the construction of a hydrocracker to meet Africa’s objective of moving to cleaner fuel that complies with both AFRI 6 and Euro-V emission standards.

According to estimates by consultancy CITAC, the necessary refinery investments amount to around $15.7 billion.

Separately, as Africa’s energy demand and population grow, the continent is looking to ensure its energy security but also combine it with clean energy projects as the increased energy demand coincides with global energy transition efforts, according to delegates at the ARDA conference.

Energy demand is expected to grow by 45%-50% between 2020 and 2040, while the continent’s population will increase from 1.5 billion to 2.5 billion in 2050, data presented by delegates indicated.

The message conveyed by delegates was that growing demand for energy must be met with cleaner fuels. However, energy security was highlighted as the short-term priority.

Meanwhile, the region’s refinery capacity and utilization remain low, with total capacity estimated at around 2 million b/d and utilization slightly above 60% in 2021, data presented at the conference showed.

In other news, TotalEnergies has signed a 20-year, 260-MW renewable power purchase agreement with Sasol South Africa and Air Liquide Large Industries South Africa, the French energy company said. In April 2021, Air Liquide and Sasol launched a joint initiative to procure 900 MW of renewable energy for their operations in Secunda.

“TotalEnergies will develop a 120 MW solar plant and a 140 MW windfarm in the Northern Cape province to supply around 850 GWh/year of green electricity to Sasol’s Secunda site, located 700 km further northeast, where Air Liquide operates the biggest oxygen production site in the world,” it said.

The two projects are expected to be operational in 2025.

S&P Global by Elza Turner, March 22, 2023

Saudi Aramco unexpectedly increased its dividend and said it would hike spending as it looks to deploy an avalanche of cash generated by last year’s surge in oil and gas prices.

The world’s biggest energy company made net income for the full year of $161 billion, the most since it listed and up 46% from 2021. Its performance was bolstered by Russia’s invasion of Ukraine roiling oil markets and the OPEC+ alliance raising production.

Aramco boosted its dividend — a crucial source of funding for the Saudi Arabian government — to $19.5 billion for the final quarter, up 4% from the previous three-month period.

US and European peers such as Chevron Corp. and Shell Plc also reported blowout earnings and are returning billions of dollars to shareholders through larger dividends and buybacks. Aramco, until now, has instead focused on using its extra cash to increase output.

Crude prices have fallen from $125 a barrel since the middle of 2022, with Brent dropping another 3.6% this year to below $83 a barrel. That’s been caused in large part by the US Federal Reserve staying hawkish on inflation and investors no longer anticipating interest rates will be on a clear downward path by the second half of 2023.

The company’s adjusted profit weakened to around $31 billion between October and December, according to Bloomberg estimates, down from $42 billion in the third quarter. Aramco will release a full financial statement on Monday.

Sabic, a chemicals firm controlled by Aramco, saw income slump in late 2022 as a global economic slowdown weighed on consumption of everything from plastics to building materials.

China bounce

Many traders still think oil will climb later this year, perhaps back to $100 a barrel, as China’s economy recovers with the ending of coronavirus lockdowns.

Demand in China and India, two of Aramco’s main markets, is robust, Chief Executive Officer Amin Nasser said to reporters on Sunday. Oil consumption will probably hit a record of 102 million barrels a day by the end of 2023, he said.

“Europe might have been impacted a little bit because of the conflict between Russia and Ukraine and economic headwinds,” he said. “But in the rest of the world, where most of our supplies go to, we are seeing pick up in demand.”

Aramco reiterated there’s too little investment globally in oil and gas production and warned that a tight market could cause prices to jump.

“Given that we anticipate oil and gas will remain essential for the foreseeable future, the risks of underinvestment in our industry are real — including contributing to higher energy prices,” Nasser said in a company statement.

Saudi Arabia has criticized Western governments and energy firms for trying to transition to clean energy too quickly. Aramco, in contrast, is spending billions of dollars to raise its daily oil capacity to 13 million barrels by 2027 from 12 million, and gas output by more than 50% this decade.

Aramco spent $37.6 billion on capital projects in 2022 and will increase the figure to between $45 billion and $55 billion this year, it said. In addition to oil, its investing heavily in cleaner fuels including hydrogen.

The full year dividend of $75.8 billion — the world’s largest for a public company — was easily covered by free cash flow, which soared to almost $149 billion.

“We’re aiming to sustain it at this level and grow it through the years,” Chief Financial Officer Ziad Al-Murshed said of the dividend.

Aramco will also issue one bonus share for every 10 shares owned.

The gearing ratio, a measure of net debt to equity, fell further into negative territory as the firm’s finances improved. It dropped to -7.9% from -4.1% at the end of September.

Crude production averaged 10.5 million barrels a day in 2022, the highest level ever for the kingdom. That came as the Organization of the Petroleum Exporting Countries and its partners — a 23-nation group led by Saudi Arabia and Russia — opted to pump more following deep supply cuts in 2020 as Covid-19 battered the oil market.

OPEC+ staying put

Saudi Arabia’s energy minister, Prince Abdulaziz bin Salman, has indicated the alliance will leave its quotas unchanged for at least the rest of the year.

Aramco, based in Dhahran in eastern Saudi Arabia, carried out an initial public offering in 2019. The government still owns around 98% of the stock, which was unchanged on Sunday in Riyadh at 32.80 riyals.

Aramco has a market value of $1.9 trillion, second only to Apple Inc.

By Energy Voice, March 22, 2023

Petroleum products are processed from crude oil and other liquids made from fossil fuels and are used by people for a variety of things.

Biofuels are utilized similarly to petroleum products, most commonly in blends with gasoline and diesel.

The main significant energy source for Pakistan’s yearly total energy consumption has historically been petroleum. Petroleum-based products are used to power cars, heat buildings, and generate energy. Plastics, polyurethane, solvents, and countless more intermediate and finished commodities are produced by the petrochemical industry, which is a part of the industrial sector.

Pakistan has 19 million tons (MT) annual demand for petroleum products, although it meets roughly half of that need through local crude production and refinery processing of imported crude. Transportation, energy, and industry are the three major users that rely on petroleum products. Petroleum products are used for transportation 59%, power 32%, and industry 8%. Due to their commercial links and the ability to delay payments, Pakistan frequently purchases from Saudia, Qatar & Gulf Countries, although now purchase from Russia is in files, too. 

Another issue in Pakistan is the low production capacity of the refineries, which significantly affects the country’s oil exports. Almost 50-40 % of the total capacity is being utilized by all refineries. By building new oil refineries and increasing the capacity of the ones that already exist, Pakistan may enhance its exports.

By providing incentives to investors and reducing the existing high tariffs on refining equipment, this process may be sped up. In Pakistan, there are five refineries that are in operation: Pak Arab Refinery Limited (MCR), Attock Refinery Limited (ARL), Byco Petroleum Pakistan Ltd (Byco), National Refinery Limited (NRL), and Pakistan Refinery Limited (PRL). These refineries have an approximate 19.37 million tons capacity overall. Domestic refineries generate around 11.59 MT, importing the remaining amount (8.09 million tons).

Because of this, some refineries are only operating at 40% of their actual capacity. It is worth mentioning that due to the superior profit margins enjoyed by existing refineries that use hydrocracking technology, the most recent deep conversion plant is unable to compete. If hydrocracking petroleum refineries are permitted in Pakistan, the technique is abandoned internationally and Pakistan may face several consequences.

It is important to keep in mind that oil is highly combustible and that caution must be exercised while keeping flammable liquids in storage, especially. The Dangerous Substances and Explosive Atmospheres Regulations 2002 (DSEAR) are in place to prevent a fire or explosion at work and define a flammable liquid as one with a flashpoint of 60°C.

Regardless of the quantity of oil stored, a risk assessment is required under DSEAR to determine whether existing control measures are sufficient to manage the risk of fire or explosion or whether additional controls or precautions are necessary.

In addition to day-to-day activities in the laboratory, it is necessary to assess non-routine activities, such as maintenance work where there is often a higher potential for fire and explosion incidents to occur.

The Health and Safety Executive (HSE) guidance notes that often fires or explosions occur when vapours or liquids are released from a controlled environment to areas where there may be an ignition source, with incidents commonly arising during transfer operations including movement from storage facilities within premises and dealing with spillages. Even the most proactive safety program cannot cover every exposure. The spill and emergency planning should include steps for responding to every potential hazard.

The inspection and maintenance processes are the first line of defence in preventing equipment condition-related accidents. How often to inspect depends on the age and condition of the equipment, as well as the potential threat to life and property should a leak or sudden release occur. Any defects should be addressed immediately.

Both visual and nondestructive testing of equipment can assess the integrity of the tanks and other equipment. Older equipment should be inspected more frequently and rigorously. Inspect tank exteriors and interiors for structural integrity. Use a detailed recordkeeping system that includes useful life forecasts to stay ahead of any potential issues.

Any equipment with a predictable lifespan should be replaced according to the manufacturer’s recommendations. Regular preventative maintenance should be done on a strict schedule, including lubricating mechanicals and checking valves, gaskets, and hoses for signs of degradation.

Chart corrosion rates for metal parts, and replace them when they reach a predetermined level. Keep oil/water separators maintained to ensure the ability to treat contaminated stormwater and help contain and prevent releases to the environment.

Bulk petroleum storage facilities come with inherent operational risks. If your operations are not properly managed, the result could be devastating to your facilities, your employees, your community, and your bottom line.

Fortunately, a comprehensive management plan that addresses hazards, controls, prevention, emergency planning, and employee training can go a long way toward mitigating many of these risks.

By establishing rigorous inspection and maintenance procedures, training employees in equipment use and incident response, and being prepared for any potential event, the storage facilities can do much to decrease losses and keep employees and communities safe.

To avoid any serious risk or to prevent any disaster, OGRA should ensure strict compliance with the safety standards for all storage belonging to various Oil Marketing Companies (OMCs).

Proper 3^rd Party Safety Inspection should be ensured and no favouritism or inclination should be shown by OGRA towards any particular OMC. All such depots that are non-compliant with safety standards,  should immediately be sized to operate and should allow operating only after proper 3^rd Party Inspection.

Further to strengthen safety importance & compliance, all retail outlets allowed on the basis of non-safety compliant depots should immediately be seized.