Pakistan Agriculture News

Russian firm seeks crude oil-supply guarantee from KP

ISLAMABAD – A Russian company, planning to set up an oil refinery, has demanded lifelong crude oil-supply guarantee from Khyber Pakhtunkhwa during its operations.

“The company has asked the KP government to ensure supply of crude oil for its proposed refinery capable of refining at least 200,000 barrel per day (bpd),” official source told The Nation here Sunday.

“We have told the Russians that no one can guarantee the oil at a particular location but one thing is sure that the KP crude will further increase in the coming days and the Russian firm will have enough oil to refine” the source said.

“We have told them that the current oil production from Karapa and Makori fields are around 32000 barrel per day and the newly discovered Bharatai oil field will add another 15000 barrel of crude to the supply”, the official said.

Last week the Khyber Pakhtunkhwa government signed an agreement with a Russian consortium of investors for establishment of an oil refinery in the province with an investment of Rs35 billion having refining capacity of 200,000 barrels/day.

The Russian consortium of investors includes Inter-Rao Engineering and Himmash Apparat partnered with Orpheus Energy signed the agreement with the Khyber Pakhtunkhwa Oil & Gas Company Limited (KPOGCL).

After signing the MoU for setting up the oil refinery with the government of KP the Russian company has asked for the assurance of crude oil supply from the government and the federal government.

The KP government also told the investors that as a nearest refinery the Russians will have the right over the crude supply in the nearby old fields.

But Russians raised the question that what if another investor established another refinery near the mouth of the oil field? They have also raised the question that what if the operator early exhausts the oil field?

Since the refinery requires enough water for its operations therefore the Russians are planning to install the refinery at Karapa, near the water source, and will transport crude oil via tankers.

The Russian also proposed that they can establish a crude oil storage near the Neshpa oil field and will transport oil to their refinery. But the KP government proposed that instead of establishing storage near oil field they can setup the refinery at the mouth of Neshpa oil field.

Now they will carry feasibility of both the Neshpa and Karapa, the official said.

It is pertinent to mention here that KP has already signed a MOU for establishment of oil refinery in Karak with a refining capacity of 40,000 barrels/day with Frontier Works Organization (FWO). KP is in the process of establishment two refineries with combine capacity of 60,000 barrels/day.

Currently, the KP’s crude oil production is54,000 barrels/day and it is forecasted that by the end of 2018 it will reach to 70,000 barrels/day.