Attock Refinery: A legacy spread over a century

Adil Khattak, CEO of Attock Refinery since 2005, has been associated with the Attock Oil Group for almost 50 years. He has extensive experience in engineering, maintenance, human resource management, project management and marketing.

Khattak also holds Chief Executive Officer position of Attock Gen Limited, National Cleaner Production Centre, President, Attock Sahara Foundation. He is on the Boards of Attock Petroleum Limited, Attock Hospital Limited, Oil Companies Advisory Council (OCAC), Petroleum Institute of Pakistan (PIP), Lahore University of Management Sciences (LUMS), Ghulam Ishaq Khan Institute of Engineering Sciences and Technology (GIKI), Sustainable Development Policy Institute (SDPI) and Co- Chair, NUST Corporate Advisory Council (CAC). Followings are excerpts from his exclusive interview with Pakistan & Gulf Economist:

PAGE: Attock is the first refinery established in Rawalpindi. Tell us about its decades of experience.

Adil Khattak: Attock Refinery (ARL) has a proud history spanning more than a century and is among the oldest operating refineries in the region. Its origins can be traced to the discovery of oil at Khaur in 1915, recognized as the first commercial oil discovery in what is now Pakistan and one of the earliest in the subcontinent.

Refining operations commenced in February 1922 at Morgah, Rawalpindi, with two small units having a combined capacity of 2,500 barrels per day. Over the past 104 years, ARL has evolved into a modern refinery with a nameplate capacity of 53,400 barrels per day.

Throughout this journey, ARL has played a pioneering role in Pakistan’s petroleum refining industry, contributing to industrial development, technological advancement and the country’s energy requirements while maintaining a strong emphasis on safety, environmental protection and product quality.

PAGE: How have its operations grown over the years?

Khattak: ARL’s growth has been driven by successive phases of expansion and modernization in response to increasing indigenous crude oil production, changing market requirements and technological developments.

Notable milestones include the early production of low sulphur diesel and furnace oil in 1988, the introduction of low lead premium gasoline in 1999, and the installation of a Heavy Crude Unit and Catalytic Reformer. A major expansion and upgradation project completed in 2016 further enhanced refining capabilities, motor gasoline production and diesel quality.

ARL has also been an early adopter of international management standards, including ISO 9001, ISO 14001 and ISO 50001, reflecting its commitment to operational efficiency and environmental performance.

We are now embarking on another significant phase of modernization following the signing of the Refinery Upgrade Agreement on 24 September 2026. The planned investment of approximately US$600 million will focus on meeting the requirements of the Brownfield Refining Policy, including the production of cleaner Euro-V fuels and increasing motor gasoline production.

PAGE: It is believed that Attock Refinery operates entirely on indigenous crude oil. How has the experience been?

Khattak: Yes, ARL is the only refinery in Pakistan operating entirely on indigenous crude oil, sourced from various oilfields across the country, particularly in the Potohar and Khyber Pakhtunkhwa regions. This distinctive capability supports Pakistan’s upstream exploration and production industry while contributing directly to national energy security.

As the only refinery in northern Pakistan, ARL occupies a strategically important position. By processing domestically produced crude into essential petroleum products, we reduce reliance on imported crude and finished products, support import substitution and help the country conserve valuable foreign exchange.

The importance of this capability has become particularly evident during recent geopolitical disruptions affecting the Strait of Hormuz. While refineries dependent on imported crude, understandably, remain exposed to international shipping routes and associated supply risks, ARL’s indigenous crude supply chain provides an important degree of resilience. Our ability to source crude domestically and produce finished petroleum products within Pakistan helps maintain continuity of supplies, particularly in the northern region, during periods of international uncertainty.

Over the years, ARL has developed considerable technical expertise in processing indigenous crude oils ranging from light to heavy grades, supported by an established network of pipelines and road tankers connecting producing fields to the refinery.

PAGE: Attock Refinery or its holding company has acquired a significant stake in National Refinery Limited?

Khattak: Attock Refinery holds a 25% shareholding in National Refinery (NRL), acquired as part of its privatization in 2005.

ARL and NRL are separate, publicly listed companies on the Pakistan Stock Exchange, each with its own Board of Directors, management and independent operational and financial responsibilities.

PAGE: What is your opinion about Pakistan’s oil refining capacity? Do we need more refineries?

Khattak: Pakistan’s 5 refineries currently have an installed refining capacity of approximately 450,000 barrels per day. However, capacity utilization has remained below potential for various reasons, including challenges in the upliftment of furnace oil due to declining domestic demand and the influx of smuggled high-speed diesel, which has undermined legitimate market demand and, at times, forced refineries to curtail production.

The immediate priority should therefore be to optimize and modernize existing refineries rather than simply add capacity. The recently signed Refinery Upgrade Agreements represent a

major step in this direction, with planned investments of approximately US$5–6 billion.

Following these upgrades, the country’s motor gasoline production is expected to increase by approximately 70%, high-speed diesel by around 40%, while furnace oil production is projected to decline by approximately 65%. These investments will improve fuel quality, reduce dependence on imported finished products and generate foreign exchange savings.

Pakistan also introduced its Greenfield Refining Policy in 2023, offering substantial incentives, including a 20-year income tax holiday and 25 years of tariff protection for qualifying large-scale refineries. Despite these incentives, new refinery development has remained challenging.

This reflects the substantial capital requirements, financing complexities and long-term commercial commitments associated with a greenfield refinery. For instance, the proposed integrated refinery and petrochemical complex at Gwadar has been estimated at approximately US$10 billion.

In the longer term, additional refining capacity may be required depending on economic growth, future petroleum demand and the evolving energy mix. However, investments must be commercially and technically sound, supported by modern refining technology and a stable, predictable policy environment.

Pakistan faces furnace oil glut of 632,000 tons

Pakistan faces furnace oil (FO) glut of 632,000 tons following refusal of power plants to stockpile the fuel and poor export feasibility due to its low price in the global market.

The FO stocks have been accumulating since the start of last winter when power demand shrunk. Power plants are still not lifting furnace oil as electricity generation is mainly coming from hydel and nuclear sources, which have cut the demand of fuel oil for power generation.

The attempts by refineries to export furnace oil did not prove lucrative because of low price. Refineries determined it was financially unviable to export FO, as it could eat up their profits if the fuel was exported in the international market at a low price.

According to the sources in the oil sector, total 632,000 FO stocks include 539,080 tons of useable stocks and 93,147 tons of dead stocks.

Pakistan’s oil marketing companies (OMCS) currently hold 203,879 tons of furnace oil stocks, which is 32% of total stocks. The country’s power sector holds 202,280 tons of the fuel oil stocks with it, which is 33%, while local refineries have 220,068 tons, which is 35% of the total stocks.

The breakup of FO with the local refineries shows that PARCO holds 116,004 tons, National Refinery Limited has 32,327 tons and Pakistan Refinery 44,455 tons, Attock Refinery 16,826 tons, and Cnergyico has 10,457 tons of FO stocks.

The present FO stock is huge and is making the operations of local refineries vulnerable because it has been interrupting their operational capacity. They said that if the FO stocks were not lifting, it could further lead towards a shutdown of refineries’ operations.

On exporting the FO, industry people said that PARCO exported 60,000 tons and PRL exported 25,000 tons but the export price was not lucrative. The price in the global market is on the lower side and it can cause financial issues for the refineries if the stocks are exported at this price.

The situation is not attractive for the local refineries as power generation from FO in the month of February slumped by 80% compared to the same month of last year and in the first eight months of the current fiscal. Electricity production from FO also decreased by 50% compared to the same period of the last financial year.