KARACHI: National Refinery Limited (NRL) expects the long-awaited refinery policy to receive government approval soon, with the company saying that most outstanding issues have been resolved, paving the way for its planned brownfield refinery upgrade.
Speaking at the *Pakistan Investor Connect Conference, NRL Chief Executive Officer *Asad Hasan said the proposed upgrade, estimated to cost between *$400 million and $1.2 billion, is expected to take *five to six years to complete after the policy is approved and implemented.
A feasibility study for the project is currently being conducted by UK-based engineering consultant Wood, which will determine the final scope and technical requirements of the refinery expansion.
The modernisation project is aimed at enabling NRL to produce Euro-V compliant fuels while substantially reducing furnace oil production, aligning the refinery with changing domestic fuel demand and stricter environmental standards.
According to the company’s management, up to 27.5% of the cost of a new processing unit could be financed through the *OGRA escrow account, while the remaining investment would be met through internal cash generation and external borrowings under an optimal debt-to-equity ratio of either *80:20 or 70:30.
NRL also highlighted a significant shift in its product portfolio over recent years. Annual high-speed diesel (HSD) production is projected to increase to around *900,000 tonnes in FY2026, up from approximately **635,000 tonnes in FY2022. Similarly, *motor spirit (petrol) production is expected to rise to nearly *300,000 tonnes, compared with around *160,000 tonnes during the same period.
In contrast, lubricant base oil production has declined from approximately 156,000 tonnes to around 125,000 tonnes, reflecting evolving market demand and refinery optimisation.
The company noted that its operating cost stands at approximately *$8-9 per barrel, higher than the *$5-6 per barrel** typical of conventional hydro-skimming refineries, owing to its more complex configuration. NRL remains Pakistan’s only refinery with an integrated lubricant base oil production facility.
Management added that refinery throughput had previously been affected by widespread diesel smuggling, but operating conditions have improved following a decline in illicit fuel inflows. As a result, the company has recently been able to sell its entire high-speed diesel production.
NRL also experienced significantly higher working capital requirements during the recent Iran-US conflict. According to management, crude oil prices surged from around $69 per barrel in February to an average of $126 per barrel in March, while freight and insurance costs rose sharply to $5-6 per barrel from $1-1.5 per barrel.
As a consequence, the refinery’s credit line utilisation increased substantially, rising to around Rs150 billion from approximately Rs50 billion, reflecting the higher cost of crude imports and logistics.
