Pak-Arab Refinery Limited (PARCO), established in 1974 as a Pakistan–Abu Dhabi joint venture. PARCO operates as an unlisted public limited company, with its corporate headquarters in Karachi and a state-of-the-art refinery located at Mahmood Kot near Multan.

PARCO was established with the objective of developing the Mid-Country Refinery (MCR) and an integrated pipeline network to enable efficient crude oil transportation from Karachi to Mahmood Kot. The cross-country pipeline system was commissioned in 1981, marking a key advancement in Pakistan’s energy infrastructure. In 2000, PARCO commissioned the Mid-Country Refinery, one of the country’s most advanced and complex facilities. Following a major revamp, the refinery now has a processing capacity of approximately 120,000 barrels per day, significantly strengthening the national petroleum supply chain. To extend product distribution, PARCO commissioned the 362-km Mahmoodkot–Faisalabad–Machhike (MFM) Pipeline in 1997. Designed for the transport of refined products such as diesel and kerosene, enhancing the efficiency and reliability of product movement across the region.

PARCO operates most extensive and strategically important energy infrastructures, encompassing refining, transportation, and marketing of petroleum products. They produces a wide range of products including High-Speed Diesel, Motor Gasoline, Furnace Oil, LPG, HOBC, Kerosene, Jet Fuels (JP-1 & JP-8), Asphalt, Sulphur, and Light Diesel Oil. Its integrated pipeline network, extending over 2,000 kilometers, transports crude oil and refined products from Karachi to Mahmood Kot and onward to Faisalabad and Machike. Equipped with advanced SCADA and telecommunication systems, PARCO ensures safe and efficient operations. Through consistent maintenance and modern technologies such as Chemical Drag Reducers, PARCO maintains high operational reliability. This extensive infrastructure forms a vital energy lifeline for Pakistan’s central and northern regions, ensuring secure and cost-effective fuel supply.

PARCO is a joint venture between the Government of Pakistan (GoP) and the Emirate of Abu Dhabi (EAD), reflecting a longstanding partnership between the two nations in Pakistan’s energy sector. The Government of Pakistan, represented by the Ministry of Energy (Petroleum Division), holds a 60% equity stake, while the remaining 40% is owned by the Emirate of Abu Dhabi through Abu Dhabi Petroleum Investments LLC (ADPI), a majority-owned subsidiary of Mubadala Investment Company, the sovereign investment arm of the Abu Dhabi Government.

PARCO’s stability remains strong, supported by its sovereign-backed ownership and integrated operations spanning refining, transportation, and marketing. The Company’s resilient business model ensures consistent cash flows and operational reliability. Committed to responsible and sustainable practices, PARCO actively mitigates environmental and operational risks while embracing climate change initiatives for a sustainable future, and this can be witnessed from the fact that Pak-Arab Refinery Limited (PARCO) was honored at the 22nd Annual Environment Excellence Awards 2025, receiving the Environment Excellence Award for the 20th consecutive year. It fosters an inclusive, safe, and transparent work environment that values diversity and talent. Guided by its “Zero Harm” vision, PARCO embeds Health, Safety, and Environment (HSE) excellence into every aspect of its operations to protect people, assets, and the environment. In recognition of these efforts, PARCO secured the Fire & Safety Award 2025 at the 15th Annual Fire Safety Awards.

The Government of Pakistan regards PARCO as a vital national asset, ensuring the country’s energy security through its refining and transportation network. Complementing this, Abu Dhabi Petroleum Investments LLC (ADPI) contributes international expertise, advanced technology, and global best practices to enhance operational efficiency. The combined strengths of sovereign ownership, technical proficiency, and strategic foresight from both partners underpin PARCO’s strong governance, financial discipline, and sustained leadership in Pakistan’s energy sector.

The bilateral state partnership ensures exceptional financial resilience and stability. The likelihood of timely sovereign support remains high in the event of financial or operational stress. Mubadala, Abu Dhabi’s premier strategic investment entity operating in more than 50 countries, adds substantial financial backing and global expertise. This combination of government commitment and international investment capability grants PARCO access to extensive capital resources, supporting its sustained growth and infrastructure development.

PARCO is governed by a ten-member Board of Directors (BoD), six are nominated by the GoP, including the Chairman and the Managing Director (MD), ensuring alignment with Pakistan’s energy policies. The remaining four directors are nominated by ADPI (including one representing OMV), indicating the interests of the EAD. This balanced composition of the Board ensures that both stakeholders have a significant influence on the strategic direction and governance of the Company, combining the GoP's focus on national energy security and EAD's technical and financial expertise.

Mr. Momin Agha, the Chairman of Pak-Arab Refinery Limited (PARCO), brings a wealth of experience in general management. Currently serving as Secretary in the Ministry of Petroleum, Mr. Agha also holds a directorship at Oil & Gas Development Company Limited (OGDCL). PARCO’s board comprises of highly qualified members, mostly from well-renowned institutions. It has a blend of business studies, general management, law, engineering, and finance professionals. Experience profile of the board is rich.

In FY25, the Board of Directors held several meetings to discuss strategic matters including the adoption of financial results, review the progress of ongoing major projects, and assess the annual budget. The Board is supported by four committees: Finance, HR, Audit, Risk & Compliance and Investment. Each committee is chaired by a board member and includes other non-executive board members, ensuring effective oversight and governance across key areas of the Company.

PARCO's auditor, KPMG Taseer Hadi & Co. Chartered Accountants, one of the Big Four accounting firms, holds a satisfactory QCR rating from the Institute of Chartered Accountants of Pakistan (ICAP) and is classified in Category "A" on the State Bank of Pakistan's panel of auditors under Section 35 of the Banking Companies Ordinance, 1962. They have issued an unqualified opinion on the Company's financial statements as of June 30, 2025.

The organizational structure of the Company is divided into various divisions and departments. All the divisions are managed by General Managers (GM) / Divisional Heads. Despite the GoP’s stake in the ownership structure of PARCO, the Company enjoys operational autonomy.

Mr. Irteza Ali Qureshi assumed the role of Managing Director at PARCO in February 2024. He has been with the Company for over four years. A UK-qualified Chartered Accountant, Mr. Qureshi brings over 25 years of experience in business strategy, value creation, operational turnarounds, organizational restructuring, and business development. He began his career at PriceWaterhouseCoopers (PwC) in London in 1991 and has since held senior management positions in general and financial management across both the private and public sectors, as well as multinational organizations in Pakistan and abroad. Mr. Qureshi possesses extensive expertise in operations, finance, audit, consultancy, treasury, and business development. The management team is well qualified, mostly associated with the Company since long.

Over the years, PARCO’s effective management has played a pivotal role in strengthening the organization through consistently progressive outcomes. Moreover, the management’s sound decision-making has helped make internal processes more structured and efficient.

The Company generates MIS reports on daily, fortnightly, monthly, and annual basis. These mainly include daily cash position, daily production report, saleable stock position, Treasury and Accounts section MIS, monthly debtors aging, monthly management accounts, and Annual Financial Statements.

PARCO implemented the latest version of SAP i.e. SAP S/4HANA Enterprise Resource Planning (ERP) system in 2024 to further strengthen its control environment and improve operational efficiency. The advanced platform integrates core business functions, including finance, supply chain, operations, and human resources, into a unified digital system. This upgrade has enhanced data accuracy, transparency, and real-time decision-making, enabling more effective planning, coordination, and performance monitoring across all business segments.

As of FY25, Pakistan’s combined refining capacity stood at approximately 22 million MTPA, with total consumption of refined petroleum products, including Motor Spirit (MS), High-Speed Diesel (HSD), Kerosene, Jet Fuel, and Furnace Oil (FO), rising to ~17.53 million MT (FY24: 16.32 million MT). Local refineries supplied 10.54 million MT (FY24: 10.08 million MT), fulfilling around 60% of national demand, while imports covered the balance. The recovery in demand was underpinned by improved macroeconomic stability as inflation declined to 4.49% in FY 2025 (from 12.6% in FY 2024) and the policy rate was reduced by 950 bps to 11.0%, easing financing costs and supporting industrial activity. Despite these tailwinds, sector profitability was moderated by narrower product–crude spreads, softer global crude prices, and the ongoing presence of untaxed HSD entering through informal channels, which contributed to inventory build-ups and less-than-optimal utilization levels. FO demand further weakened due to the ongoing energy mix transition, although exports exceeded 1.4 million tones in FY25, providing some relief. Meanwhile, the sector’s USD 6 billion brownfield upgrade program faces delays following the IMF’s rejection of proposed fiscal incentives and uncertainty over input tax recoverability. Sustained policy clarity and fiscal support remain essential to restore margins, incentivize Euro-V compliant conversions, and ensure long-term sectoral viability.

PARCO, being the most advanced refinery in the country, consistently maintains a dominant market share. In FY25, PARCO's market share stood at approximately 44%, while Attock Refinery, Pakistan Refinery, National Refinery, and Cnergyico contributed around 14% each.

PARCO’s sales declined by 15.6% in FY25 to PKR 965,108 million, down from PKR 1,143,395 million in FY24, which had seen a 19.6% growth. The decline is mainly due to major maintenance activity (Turnaround-05) carried out at the plant during the first half of FY25, along with broader industry-wide pressure on refining margins amid a challenging environment marked by volatile crude oil prices, geopolitical tensions, and shifting supply-demand dynamics. Early signs of recovery emerged in 1QFY26, with annualized 1QFY26 sales showing a 9.5% increase compared to the full-year sales of FY25.

The Company’s gross profit margin declined to approximately 3.9% in FY25 from 8.1% in FY24, but rebounded strongly to 10.7%, annualized in 1QFY26 compared to 0.6% in 1QFY25. Similarly, the net profit margin declined to approximately 2.3% in FY25 from 4.8% in FY24, before recovering to 6.0% in 1QFY26 on an annualized basis, compared to 1.1% in 1QFY25. This margin compression during FY25 was primarily driven by the narrowing spread between crude oil costs and refined product prices.

PARCO is in the process of conducting a feasibility study for refinery upgrades to achieve Euro-V compliance and reduce furnace oil production, in line with tariff protections available under the 2023 Refining Policy.

PARCO’s working capital requirements mainly arise from financing its crude oil inventory and receivables, with the company primarily relying on internal cash flows to cover these needs. Over the years, PARCO has demonstrated strong working capital management, reflected in efficient net working capital days of 31 in 1QFY26, 31 in FY25, and 37 in FY24. However, in 1QFY26, short-term borrowings surged to PKR 67,806 million, up significantly from PKR 19,163 million in FY25 and PKR 53,344 million in 1QFY25, mainly due to dividend payment.

During FY25, the Company’s coverage ratio declined sharply to 1.3x from 7.2x in FY24, primarily due to higher interest expenses and reduced profitability, which resulted in a moderate decrease in cash flow from core operations. However, in 1QFY26, the coverage ratio improved markedly to 12.9x, supported by lower finance costs and a significant increase in free cash flow from operations (FCFO) to PKR 20,590 million, up from PKR 11,077 million in FY25. The Company’s financial resilience is further bolstered by consistent interest and dividend income.

PARCO maintains a moderate-leverage capital structure, with leverage standing at ~34.9% at the end of 1QFY26, a notable increase from 11.8% at the end of FY25 and 3.6% at the close of FY24. The Company’s debt primarily consists of short-term borrowings, which fluctuates in response to working capital requirements.