KARACHI: All refineries of the country, except Pak-Arab Refinery Limited (Parco), are putting up isomerisation projects and spending over $500 million collectively to produce fuel that meet Euro-II emission standards.

Pakistan Refinery Limited (PRL) has already commissioned its isomerisation unit. Other refineries are near completion and are expected to start production of Euro-II 87 RON (research octane number) by third quarter of 2016.

“Production of higher RON PMG (premier motor gasoline) with the refineries’ existing configurations (geared for 87 RON) is not a technically or financially viable option,” Ilyas Fazil, the chief of Oil Companies Advisory Council (OCAC), told Dawn.

However, the refineries have expressed their willingness to target higher RON. Fazil said that for producing higher (92) RON, refineries would have to again upgrade their facilities, which would require a minimum of 36 months and millions of dollars additional investment.

On price differential, he said prices of 92 RON and 87 RON differ by roughly Rs2.5 to Rs3 per litre and that of 95 RON and 87 RON by Rs4 to Rs6 per litre, based on international rates.

The main parameters of Euro-II PMG specs are sulphur (a maximum of 500 parts per million [ppm]), and benzene (5 per cent volume maximum). The RON targeted determines the actual value of benzene achieved relative to the maximum limit.

The petroleum ministry has notified PMG specs which also specify 87 RON minimum, benzene 5pc volume maximum, and sulphur 0.05pc weight (500ppm) maximum. Benzene and sulphur, and not RON, determine the environment-friendly nature of the gasoline.

Besides local production, Pakistan has also been importing petrol for the last many years to overcome demand and supply gap. The OCAC chief said 87 RON minimum is being imported in line with the marketing specifications notified by the petroleum ministry.

On a question what local car assemblers say about the usage of petrol grade, Fazil said booklets of assemblers vary as some say 87 and others 89. For motorcycles/scooters, the fuel of choice is only gasoline. Two-wheelers constitute around 55pc of Pakistan’s vehicles, for whom 87 RON is the technical requirement.

Asked how many countries have moved towards RON 92 or above grade petrol, he said each country sets its own minimum RON specifications based on its own local conditions.

When asked about the proposal of Shell Pakistan Limited (SPL), he said SPL has proposed marketing of higher RON differentiated PMG on a totally deregulated model, in which the product will be imported and marketed by them at a market price of their own, at their own risk and arrangements.

In their proposal, 87 RON would remain the main-grade offering and would continue to be a regulated product with no change in its pricing mechanism or any impact on the product volume from the local refineries.

Published in Dawn, September 1st, 2015

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