Attock: Attock Refinery has announced a significant investment of $600 million for an upgrade to its refinery infrastructure, a move expected to span over four to five years from the appointment of an EPC contractor. The company has also revealed a halt in the smuggling of Iranian fuel, which previously constituted nearly one-third of the total high-speed diesel (HSD) demand in the region.

According to JS Global, the refinery's upgrade plan includes a 40% equity contribution to the project's total cost. The management has also addressed developments in the HSD market, noting that the government has capped HSD crack at $38 per barrel, while the current rate stands at $34 per barrel. The company intends to recognize a deemed duty of 7.5% on HSD in its financial statements, with additional duties allocated to a Refinery Upgradation Account.

The company reported that it sources crude oil and condensate from local and international markets, with pricing based on a mix of crudes and Indonesian condensate. It also disclosed that it does not benefit from the crude spot premium applicable to coastal refineries as it does not import crude oil. In recent developments, Attock Refinery has started receiving crude oil from the Baragzai field and has indicated the potential for greenfield refinery expansion, contingent on increased crude availability.

In terms of product output, the company has highlighted elevated conversion costs due to the use of additives to upgrade petrol to meet benchmark requirements, along with a higher proportion of petrol in its product mix. The management also noted that low-sulfur furnace oil is primarily sold domestically due to current market conditions, despite typically commanding a premium price over conventional furnace oil.

With a positive outlook on the company's stock, JS Global maintains a buy stance on Attock Refinery, with shares trading at a FY27 P/E ratio of 3.2x.