CVO Petrochemical Refinery has suspended production for three months after Petrobangla suspended the supply of condensate – the raw material used to produce fuel products such as petrol, diesel, kerosene and octane – to the refinery.
Condensate – a by-product of gas – is mined together with natural gas in the gas fields. All private refineries are dependent on Petrobangla – the government-owned oil and gas corporation – for this sole raw material.
Complying with an order of the Energy and Mineral Resources Division, Petrobangla has suspended the supply of condensate to all private refineries for three months – from July to September.
"The government took the decision because of the poor production of natural gas due to the novel coronavirus pandemic," said an official of Petrobangla.
An official of the refinery said now the company will not be able to continue production for the three-month period as the condensate is the sole raw material used in its condensate fractional plant supplied by Petrobangla.
However, Petromax Refinery, which produces fuel by using condensate, said it did not receive a letter from Petrobangla regarding a suspension on condensate supply.
Refinery is a subsidiary of Shahjibazar Power Company Limited – which is a listed company on the share market.
Yeasin Ahmed, company secretary of Shahjibazar Power, told The Business Standard, "We have not received a letter from Petrobangla on this issue. Our production is ongoing amid the novel coronavirus pandemic."
CVO Petrochemical Refinery
Of the refineries, only CVO Petrochemical Refinery is listed on the share market. In 2014, the company shifted its business from producing edible oil to refining condensate.
It entered into an agreement with the Jalalabad Gas Field to buy condensate. The agreement will expire on December 31, 2020.
The company is engaged in the production and sale of fuel like motor spirit, high speed diesel and mineral turpentine from natural gas condensate. The installed production capacity of the company is 150 tonnes per day.
In the first three quarters of the 2019-20 financial year, the company incurred a loss of Tk0.37 per share. During that period, its revenue dropped by four percent to Tk52.92 crore.
The company official said due to lack of condensate supply, the company could be able to utilise only 20 percent of its total production capacity. The company wrote the authorities several times in this regard but no solution has yet been found.
Petromax Refinery also losing business
Petromax started commercial operations in 2013. Octane is its main product, but the company also produces small quantities of diesel, petroleum and kerosene. It buys condensate from the Rupantarito Prakritik Gas Company.
Shahjibazar Power, a sister concern of Youth Group, holds a 90 percent share of Petromax Refinery with an investment of Tk90 crore.
In the fiscal year 2013-14, Petromax earned Tk362.35 crore and made a net profit of Tk20.59 crore. The following year, fiscal year 2014-15, the company earned a maximum of Tk764.26 crore and made a net profit of Tk72.88 crore. Since then, its business has declined.
In the first three quarters of the 2019-20 financial year, revenue of the company fell by 12 percent to Tk379.93 crore. Further, it posted a loss of Tk5.12 crore from its refinery business.