Pakistan to build second oil products pipeline

Nov 26, 2003 01:00 AM

Pakistan plans to start the construction of a second pipeline carrying clean oil products next year to cut the upstream transportation costs, the managing director of the main state-run oil firm said. The first such pipeline, stretching around 800 km from Karachi to Multan, is expected to be completed by the middle of 2004. Pakistan State Oil Managing Director Tariq Kirmani told a second pipeline would link Lahore to Peshawar 470 km away at a cost of $ 130 mm.
"We hope to do the ground-breaking for this pipeline in June next year," he said, adding that it would be jointly financed by PSO and Attock Refinery.

Mr Kirmani said the second pipeline would have the capacity to move annually around 4.2 mm tons of gasoline and diesel, lighter or so-called "white oil" as opposed to heavier fuel oil. He said PSO, Pakistan's largest oil marketing firm with a share of around 68 % of the petroleum business, also planed to build a refinery once the firm was privatised.
"It is very important for us to have sustained supply source in the long run and that's why we are planning to build this refinery," he said. The government plans to sell a 51 % controlling stake in PSO, but the bidding has been repeatedly delayed. Mr Kirmani said the refinery envisaged would cost about $ 1.4 bn and have a capacity of 150,000 bpd of crude.

Analysts have said the sale of PSO could fetch between $ 500 mm and $ 800 mm. A market source told that range seemed high given the firm's market value now of $ 782 mm, but company officials dispute this view. Mr Kirmani said domestic consumption of petroleum products, which fell 9 % in the fiscal year 2002-03, was now picking up due to improved industrial growth.
"The consumption of white oils is a major determinant of economic growth," he said. "It recorded a growth of 2.6 % in the last fiscal year. And this year, from July to October, the growth has been over 6 %."

Source: The DAWN Group of Newspapers
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