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Petrojam Limited will begin the first phase of its refinery-upgrading project this financial year, which will see a conversion of heavy fuel oil into higher valued products such as vacuum gas oil for sale on the export market.
As stated in a report on the company tabled in the House of Representatives by Commerce, Science and Technology Minister, Phillip Paulwell on June 1, the upgrading project, which will be undertaken over the next three years, is intended to ensure security of supplies for the nation’s energy needs and enhance the competitiveness of the refinery.
To ensure the long term survival of the refinery, Petrojam will over the next three years, seek to increase refinery gross margin from seven per cent average to 14 per cent; achieve at least a 50 per cent reduction in the operating expense gap by 2006/2007 and achieve full ISO quality certification for the refinery by 2007/2008.
In terms of market growth, the company will seek to achieve and maintain local market share at a minimum of 85 per cent starting this year and achieve export volume of 2.5 million barrels by the end of the year and 7.7 million barrels after 2008/2009.
The company has also committed to reduce maintenance expenses by at least five per cent per annum and achieve a minimum safety index of 100, with a 10 per cent per annum reduction in the number of incidents.
In terms of the company’s performance during 2004/2005, the report said that shutdown for maintenance works from August to September and the explosion of the T-6 tower on October 27, affected performance targets. The extended downturn resulted in lower than budgeted refinery gross margin due to increased importation of finished products; low export volumes; higher than planned maintenance expenses and lower productivity ratio.
The report noted however, that the entity has been able to rebound to achieve an increase in market share; and to contain oil loss and administrative expenses.
Also during the period, the refinery secured a contract to supply asphalt for the second phase of the Highway 2000 project, signed a new supply agreement for the sale of bunker fuel and commissioned an emulsion asphalt plant.
Major achievements were obtained in the area of customer care as well, with designs completed for the replacement of a 20-inch crude pipeline to the dock, and process hazard analysis completed for relocation of heavy fuel oil loading facilities. The oil spill response equipment upgrade was also completed, as well as the designs for a firewater system upgrading in Montego Bay. Significant progress was made in the remediation of sludge ponds.
The core business of Petrojam Limited is the operation of the 36,000-barrel per day oil refinery located on the Kingston Harbour.