bitumen production and market outlook in...

THE FIRST IRAN BITUMEN/ASPHALT FORUM 2016 August 29 - 30, 2016

Bitumen Production and Market Outlook in Pakistan

By

M. ADIL KHATTAK Chief Executive Officer Attock Refinery Limited

The First Iran Bitumen/Asphalt Forum 2016 2

CONTENTS

o PAKISTAN BITUMEN MARKET

o MAJOR PLAYERS

o GRADES AND SPECIFICATIONS

o BITUMEN DEMAND SUPPLY SCENARIO

o ROAD NETWORK OF PAKISTAN

o CHALLENGES & OPPORTUNITIES

o BITUMEN SOURCING FROM IRAN

o CONCLUSION

PAKISTAN BITUMEN MARKET



Pakistan Bitumen Market

Source: http://www.factfish.com/

Bitumen Production:

o Pakistan has a world share of 0.2%. o Pakistan is #48 in the world ranking.

1 United States

2 China

3 Russia

4 India

5 Canada

6 Iran

7 Japan

8 South Korea

9 Germany

10 Italy


Pakistan Bitumen Market

Bitumen Consumption:

o Pakistan has a world share of 0.2%. o Pakistan is #49 in the world ranking.


1 China

2 United States

3 Russia

4 India

5 Saudi Arabia

6 Canada

7 Turkey

8 France

9 Brazil

10 Germany

MAJOR PLAYERS



Major Players - Refineries

o Attock Refinery Limited (ARL) oThe only refinery in Pakistan producing bitumen till mid sixties.

o150,000 Tons per annum bitumen production capacity. Current production 50,000 – 60,000 Tons.

oProcessing indigenous heavy crudes for asphalt production.

o National Refinery Limited (NRL) oThe second refinery with asphalt production unit (Commissioned in

1966).

o240,000 Tons per annum bitumen production capacity.

o Pak-Arab Refinery Limited (PARCO) oThe third refinery in Pakistan to have asphalt production capability.

oCommissioned bitumen production unit in 2012.

o175,000* Tons per annum bitumen production capacity.

*Based on 500 ton/day & 350 stream days.


Major Players – Oil Marketing Companies

o Attock Petroleum Limited

oMember of Attock Group of Companies.

oARL and NRL also members of Attock Group.

oEnjoys group synergy and had 81.5% of bitumen market share during 2014-15.

o PARCO (Pearl) and (TPPL) TOTAL PARCO Pakistan

oPEARL; the brand name of PARCO’s marketing company.

oTPPL is a Joint venture of TOTAL S.A. and PARCO refinery

oCombined market share of both companies was 18.5 % during 2014-15.

GRADES AND SPECIFICATIONS



Grades and Specifications

Attock Refinery Limited offers following bitumen grades:

o Paving Bitumen

PEN Grade (60/70)

PEN Grade (80/100)

o Cut back Bitumen

RC-70

RC-250

MC-70

o Performance Grade Bitumen

PMB (Polymer Modified Bitumen)


National Refinery Limited offers following bitumen grades:

o Paving Bitumen

PEN Grade (40/50)

PEN Grade (60/70)

PEN Grade (70/80)

PEN Grade (80/100)



Pak-Arab Refinery Limited (PARCO) offers following bitumen grades:

o PEN Grade Bitumen (60/70, 80/100)

o Multi grade Bitumen (30/40, 40/50)

o Industrial Bitumen (10/20)


BITUMEN DEMAND SUPPLY SCENARIO



Bitumen Demand Supply Scenario

Source: Pakistan Oil Report by OCAC

-

50

100

150

200

250

300

350

400

450

500

Bitumen Production and Consumption Trend (Thousand Tons)

Bitumen Production Bitumen Consumption

The First Iran Bitumen/Asphalt Forum 2016 15 Source: Pakistan Oil Report by OCAC

-

50

100

150

200

250

300

350

Bitumen Refineries Production (Thousand Tons)

ARL NRL PARCO Refineries Total

Bitumen Demand Supply Scenario

ROAD NETWORK OF PAKISTAN



Road Network of Pakistan

Steadily increasing; current road network length in Pakistan is around 263,000 kilometers

Source: Economic Survey of Pakistan 2015-16.

200,000

220,000

240,000

260,000

280,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Road network (Kilometers)

Motorways 2,280 Highways 9,851 District/Rural Roads 251,225

Total 263,356


Road Network of Pakistan


Road Network of Pakistan (Roads Paved)

Quality of roads being improved. Currently around 71% of network consists of paved roads.

Source: Economic Survey of Pakistan 2015-16.

50

55

60

65

70

75

2001 2003 2005 2007 2009 2011 2013 2015

Roads Paved (% of Total Roads)


Vehicles per kilometer of road; increasing at an average annual rate of 6.4%

Source: Pakistan Bureau of Statistics

Road Network of Pakistan (Vehicles per kilometer of road)

-

2

4

6

8

10

12

14

16

18

20

2001 2003 2005 2007 2009 2011 2013 2015

Vehicles per km of Road


Road passengers carried; increasing at an average annual rate of 7%

0

50

100

150

200

250

300

350

1999 2001 2003 2005 2007 2009 2011

Roads, Passengers Carried (Million Passenger-km)

Road Network of Pakistan (Roads, Passengers Carried)


Roads, goods transported; increasing at an average annual rate of 11%

0

20

40

60

80

100

120

140

160

180

200

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Roads, Goods Transported (Million Ton-km)

Road Network of Pakistan (Roads, Goods Transported)

CHALLENGES & OPPORTUNITIES



Challenges & Opportunities (Extreme weather conditions)


Challenges & Opportunities (Selection of Bitumen Grades)

Paving Grade Bitumen

o 40/50 Grade

o 60/70 Grade

o 80/100 Grade

Performance Grade (PG) Bitumen


Pakistan is divided into six temperature zones

PG 70 -10 covers more than 70 % of the area

Not produced by local refineries.

The closest available grade is PG 76 -16 (PMB) from ARL.

Bitumen produced by refineries correspond to PG 58-22 , PG 64-16 and PG 64-22.

In future, NHA to consume PG Bitumen for the development/ rehabilitation of main highways and motorways in the country.

Source: Pak. J. Engg. & Appl. Sci. Vol. 8, Jan., 2011


The First Iran Bitumen/Asphalt Forum 2016 28 Source: Pak. J. Engg. & Appl. Sci. Vol. 8, Jan., 2011

Source Penetration Grade

Equivalent PG grade

ARL 60-70 PG 58-22

ARL PMB PG 76-16

ARL 80-100 PG 58-22

NRL 40-50 PG 64-16

NRL 60-70 PG 64-22

NRL 80-100 PG 58-22

Summary of Bitumen PG Grading in Pakistan


The First Iran Bitumen/Asphalt Forum 2016 29 Source: Pak. J. Engg. & Appl. Sci. Vol. 8, Jan., 2011

Required PG Grade

Available Exact Grade

Possible Grade

Availability

Equivalent Penetration

Grade

Remarks

PG 70-10

No

PG 76-16

ARL–PMB

PMB, Polymer Modified may be too hard for PG 70-10 and

may result in cracking

PG 64-10 No PG 64-16 NRL–40/50 Acceptable

PG 64-16

Yes PG 64-16

PG 64-22

NRL–40/50

NRL–60/70

Acceptable

PG 58-16

No

PG 58-22 NRL–80/100

ARL–80/100

ARL–60/70

Acceptable

PG 76-10 No PG 76-16 ARL–PMB Acceptable

PG 58-22

Yes

PG 58-22 NRL–80/100

ARL–80/100

ARL–60/70

Acceptable



oBitumen and HSFO price de-regulated

oHSFO being deficit product; price linked with Arab Gulf market

oAsphalt price dependent on demand/supply situation

Challenges & Opportunities

0

100

200

300

400

500

600

700

800

900

1,000

Jul-10 Dec-10 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16

Ex-Refinery Price Trend (US $/Ton)

HSFO ASPHALT


Challenges & Opportunities China-Pakistan Economic Corridor (CPEC)

Legend Village

Town

City

Capital

Nod City

Existing Highways

Continued

Construction Projects

Priority Projects

Short Term Projects

Mid and Long-term Projects

Other Highways

Source: Ministry of Planning, Development and Reforms, Pakistan


Challenges & Opportunities China-Pakistan Economic Corridor (CPEC)

Source: NHA, Pakistan

China-Pakistan Economic Corridor Gwadar-Khunjrab Routes


Challenges & Opportunities (Improved roads network)

oImproved roads network is the top most priority of the present government

oOver 7,000 kilometer roads (including early harvest infrastructure of CPEC) planned in the next three years.

oAsphalt demand for the next three years projected in excess of 500,000 tons/annum.

oPenetration grade 60/70 being used in most of the current road construction projects.

oPG Bitumen to be used for future development/ rehabilitation projects of main highways and motorways in the country.

BITUMEN SOURCING FROM IRAN



Bitumen Sourcing from Iran o Iran, Bahrain and Oman; Bitumen supply source in the region.

o Iran with over 5.0 Million Tons Bitumen production capacity and over 2.0 Million Tons exports per annum a key source for bitumen supply.

Gwadar


Bitumen Sourcing from Iran Iran Bitumen Production

o Iran producing around 4.0 million tons of bitumen a year.

o Iran is #6 in the world rankings.

Iran Bitumen Exports

o Iran exporting over 2.0 million tons of bitumen a year.

o Iran is #2 in the world rankings.



Bitumen Sourcing from Iran (Refineries and Bitumen Production Units)

o Pasrgad Oil controls 60% of Iran's bitumen production while Jey Oil controls the balance 40%.

o Pasrgad Oil have bitumen production plants at Tehran, Shazand, Abadan, Tabriz, Shiraz and Bandar Abbas refineries.

o Jey Oil owns one of the largest bitumen production units in the middle east next to Esfahan Refinery


Bitumen Sourcing from Iran

(Bitumen Import via Road)

Gwadar


Bitumen Sourcing from Iran

(Bitumen Import via Sea)

Gwadar

CONCLUSION



Conclusion o Future demand outlook of bitumen is upbeat.

o Fast growing vehicle population and freight services; call for improved and long-lasting roads.

o Performance grade bitumen- solution to road problems.

o Bulk handling/storage facilities for Bitumen need to be developed at ports

o Opportunity for foreign investment o PG Bitumen export to Pakistan

o Polymer/alternate chemicals for modifying paving grades to required PG bitumen

Thanks

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