Petro-Canada Nears Sale of Idle Petroleum Refinery in Canada

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Petro-Canada (NYSE:PCZ)(Calgary, Alberta) had announced plans almost two years ago to close its 90,000-barrel-per-day (bbl/d) Oakville, Ontario, refinery, and it officially idled the plant this past month, in April. This closure coincided with legislation requiring substantial reductions in sulfur content for gasoline sold in Canada. The assets of this refinery are planned to be sold to a new Pakistan-based venture company by the name of 'Indus Refinery', and the purchase is supposed to be consummated in the coming weeks. The terms of purchase are based on a where-is-as-is basis, and a condition to dismantle, package, and ship to an overseas location within twelve months of the completed sale.

The refinery will be re-assembled on an approximately 200-acre site in the Port Gasim area in Karachi, Pakistan, with an investment cost estimated at $85 million. There are two other refineries located in the immediate Karachi area, National Refinery, which has an estimated capacity of 62,050 bbl/day, and Pakistan Refinery Limited, with a capacity of 46,300 bbl/d. The strategic location of Pakistan, with land route access to the Middle East and central Asian republics, offers tremendous opportunities and potential markets.

Petro-Canada anticipates much of the lost capacity demands will be met by its refining operations in Montreal, Quebec. The terminal facilities located at the Oakville site will be expanded and will continue its operations serving the local markets. Located on the edge of town, the Oakville refinery consists of a dual train integrated petroleum refining complex with a configuration of primary fractionation and catalytic cracking in each of its two designated processing trains.

The realization of this plant's closure comes at a time when anticipations are high across the United States and Canada on how future demand will be met and whether there is enough installed capacity to meet those demands.

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