PRL may face brief closure on delayed crude cargo

KARACHI: Pakistan Refinery Limited (PRL) cargo weighing 70,000 tonnes crude oil was behind schedule due to delay in confirmation of its credit letter, which could lead to temporary shutdown of the refinery, The News learnt on Friday.

According to sources in the oil sector, PRL sent a ship to a Middle Eastern country for loading 70,000 tonnes crude oil after its letter of credit (LC) was opened by a local bank. However, the LC was not confirmed by an international bank to pave the way for loading crude oil for its onward shipment to PRL in Pakistan, they disclosed.

The LC was supposed to be confirmed on Wednesday, but the bank delayed its confirmation. Finally, the confirmation was given on Friday, which delayed the departure of the oil cargo to Pakistan, sources said.

PRL needs 70,000 tonnes crude oil to keep the refinery operational; however, the late confirmation of LC from the international bank would not allow the required crude oil to reach Pakistan by July 20, 2022.

Following July 20, the refinery might have to temporarily shut down its operations till the crude oil cargo reaches its plant in Pakistan, sources disclosed.

“The 70,000 tonnes of cargo will now likely be reaching by July 22, 2022 as per reports, the cargo will leave from the Middle Eastern country for Pakistan on Saturday. It takes six days to reach the destination,” sources revealed.

“It seems that PRL would shut down its operation for two days until the needed crude oil arrive in its plant,” sources informed.

The management of PRL, when contacted about the late confirmation of its LC for 70,000 tonnes of crude confirmed what the source had shared about the delay by an international bank.

“Yes confirmation was done late for our cargo,” Zahid Mir, Chief Executive Officer (CEO) of PRL told The News.

He said that delay was caused due to some technical issues; however, he avoided to speak in detail about any particular reasons for the delay in the confirmation of the credit letter by the international bank.

On a question about temporary closure of the refinery, Mir said the company would not let that happen as it had sought the necessary commodity from another refinery to keep its unit operational till the arrival of the 70,000 tonnes cargo.

However, as per sources, the other refinery was yet to commit on delivering the needed crude oil for PRL to continue running its refinery uninterrupted till July 22, when the 70,000 tonnes cargo was scheduled to arrive from Middle East. Pakistan’s oil sector has been facing difficulties in credit letter confirmations from international banks for oil imports after the country’s perceived credit risk increased in recent months.