SUBMITTED TO: Mr. Shahid Rasool SUBMITTED BY: Salman Habib S.

Muzammil Hussain Saira Aslam Sana Yasmeen Nadeem Abbas Amjad Hussain

IN THE NAME OF ALLAH THE MOST MERCIFUL AND THE MOST BENEFICIENT

Acknowledgements
We are very thankful to Almighty Allah Who has given us wisdom and power to learn and seek. All praises and admirations to Almighty

Allah Who is the creator of everything.

Thanks also to Hazrat Muhammad (PBUH) Who is source of knowledge and leadership for all mankind forever. We are also very thankful to our beloved teacher Mr. Mehboob Hussain, who is prompting us towards professionalism. Tons of thanks for his valuable support and consistent guidance.

Dedication
This

Report Is Dedicated

To

Who are always a source of love, affection and inspiration for us.

INTRODUCTION
Petroleum energy plays a pivotal role in the socio economic development of a country, especially for a developing country like Pakistan, where demand for petroleum products is fast increasing. Incorporated in May 1974, Pak Arab Refinery Ltd. (PARCO) has now been in existence for 27 years as a joint venture between the government of Pakistan (GOP) and Abu Dhabi. Its authorized capital is Rs. 5 billion and paid up capital is Rs. 2160 million of which 60% is held by the GOP and 40% by Abu Dhabi petroleum investments of Abu Dhabi. This long awaited project has been setup despite facing numerous obstacles and hurdles during the 1998-99 period and despite international sanctions. PARCO is presently engaged in the transportation of petroleum product on behalf of oil marketing companies OMCs from Karachi to Mahmood Kot near Multan and to Faisalabad and Machike near Lahore through its 1,230 kms. Pipeline. Parcos pipeline system includes a network of highly sophisticated telecommunication facilities and a comprehensive supervisory control and data acquisition system. Originally, Parcos pipeline network was functioning up to Mahmood Kot near Multan, a distance of 864 kms. And operating on the basis of two pumping stations at Karachi and Shikarpur with an annual pumping capacity of 2.9 million tons. Two additional intermediary pumping stations commissioned in 1994 at Bubak (Sindh) and at Fazilpur (Punjab) increased the pumping capacity to 4.5 million tons per annum. Later, with further technological upgrading of the system the pumping capacity was increased to 6 million tons. This additional capacity is a major step towards meeting the increasing requirements of petroleum products in the central and northern areas of the country, which account for over 60% of the coun trys demand of petroleum products. This increased capacity will also come in extremely handy for transporting 4.5 million tons of crude and 1.5 million tons per year of products through the existing pipelines. This timely initiative by PARCO will relieve a lot of pressure on road movement. In June 1997, PARCO completed its 364 Kms. MFM pipeline extension project and extended its operations to Faisalabad and Machike. The project design allows for further expansion of the pipeline from Faisalabad at Kharian besides Sahiwal and from Mahmood Kot to Peshawar.

PARCOs pipeline system consists of 7 pumping stations namely: PS-1 Korangi PS-2 Bubak PS-3 Shikarpur PS-4 Fazilpur PS-5 Mahmood Kot PS-6 Kot Bahadur Shah PS-7 Faisalabad (Not operational as yet)

Also, there are four terminal stations namely: TS-1 Keamari TS-2 Mahmood Kot TS-3 Faisalabad TS-4 Machike PARCO delivers the products at Mahmood Kot through a further pipeline connection of 4.5 kms. To the joint oil marketing companies facilities called JIMCO. All PARCO terminals and pumping stations have been designed according to the latest international standards and laid out in a standardized fashion for ease of operation. PARCO crosses country installations have been adjudged to be comparable to the best available in the international oil industry. The refinery will be on stream by September 2000, which will place PARCO in a unique position, with an additional capability to exploit the future trends of the oil industry in Pakistan.

Bankers Of the Company

Following are the Bankers of the company. ANB-AsMRO Bank Allied Bank of Pakistan Ltd.

 ANZ Grindlays Bank Bank Al-Falah Ltd. Bank of America Crescent Investment Bank Ltd. Deutsche Bank Emirates Bank International Gulf Commercial Bank Ltd. Habib Bank Ltd. Mashreq Bank Muslim Commercial Bank Ltd. National Bank of Pakistan National Development Finance Corporation Pakistan Kuwait Investment Co. (Pvt.) Ltd. Standard Chartered Bank The Bank of Khyber The Bank of Punjab United Bank Ltd.

Auditors of the Company

The auditors of the company are Taseer Hadi Khalid & Co. Chartered Accountants.
NUMBER OF DEPARTMENTS

Finance Department. q Human Resource Department. q Process. q Personnel & Administration. q Electrical / Instrument. q Mechanical q Technical Services. q Health & Safety Environment. q Engineering Services Company Secretary Mr. S.M. Mahboob Corporate Office Corporate Headquarters, Korangi Creek Road, Karachi- 75190, Pakistan. Registered Office Avari Plaza, Adjacent to Hilton Hotel, 87,Shahrah-e-Quaid-e-Azam, Lahore. Pakistan.

Refinery Office Qasba Gujrat, Mahmood Kot, Distt. Muzaffargarh, Pakistan.

MISSION STATEMENT
the area of product transportation, as it has in the past with the pipeline transportation.

petroleum products which is currently around 18 million metric tons, increasing at rate of 5% per annum.

OBJECTIVES
The following long term corporate objective, which are inherently embodied in the name of the company are: (P) Professional and Progressive Corporate outlook. (A) Aggressive Pursuit of Technical Excellence Advanced Planning. (R) Reliability of Service (C) Consistency in performance (O) Organized, Systematic Development.

] CORPORATE PROFILE
PARCO OIL REFINERY has been in existence for more than 30 years. Its corporate voyage by these years has been very important milestones. In the past 17 years PARCO has fully grown in size and strength and it can look with confidence towards a much brighter future. Incorporated as a public limited company in 1974, PAK ARAB REFINERY LTD is a Joint Venture between the Pakistan and Abu Dhabi. The division of shares in the Company is in the proportion of

Government of Pakistan (60%) and of ABU DHABI Petroleum Investment (ADPI) is 40% in which 7% shares are of the Govt. of Austria. PARCO's major activities are: 1. Oil Refining and allied facilities. 2. Oil Pipeline systems storage and allied facilities

Future projects.

There are following future projects of parco.

1.Diesel hydro-Desulphurisation.

It is a green diesel and this project has been completed.This green diesel is used within big cities of Pakistan and it`s consumption is low.

2.Asphalt production plant.

In this plant they will produce Asphalt which is used on roads.

3.Khlifa Coastal Refinery.

It would be setup at coastal areas at which 250,000 barrels oil would be purified.

4.Pipeline Extension projects.

There are some pipeline projects of parco which would minimize the cost of transpoatation.The piplines would be from 1.Faisalabad to Kharan. 2.Faislabad to Sahiwal. 3.Mahmood kot to Pishawar. Through these pipline the cost would be minimize upto RS.10,000 per oil tanker Which is used to take 100,000 barrels purified oil to different areas of country.

Core Competencies.

There are following Core Competencies of Parco.

1. Flexibility.

There is regular hiring of employees and there is full job security no one cane fire any employee from job.It provides professional working environment and good salary packages.

2. System and Technology

ISO check the standard either the oil is refining up to the standard or not.Parco has a huge integrated system in following catagories. 1.Product technology 2.Process technology. 3.Information technology. The first two technologies are based on Japanies technology system.The two Japanies consutant service have completed them.As for information technology it concern with different applications of the softwares for the purpose of administration.Which was developed by the Pakistan company ORA-TECH system.

3.cost

Pipline system has minimize the cost of transportaion to long disance like Faisalabad to kharian 190km Faisalabad to Sahiwal 90km

Mehmodkot to Pishawar 450km Parco sales the oil to the government Rs. 20 per liter.110% reflnery is working and 30% of refined oil is selling on daily baises.

4.Facilities.
PARCO has provided different facilities to employees.it includes residence,transport,Bloomfield school,market,shopping bus,Parco club,Market which contains all necessary products,gym,Hajj policey,IBN E SINA hospital.

BOARD OF DIRECTORS
-Khaily Director/Vice Chairman

Director

-Ramahi Director -Qahtani Director -Heinz Horrak Director The company manages by professional management. The relationship between workers and management are coordinated. The employees are quite satisfied with their management. The workers are drawing handsome salaries. The management is also satisfied with the performance of employees.

Financial Year
The financial year of the company begins from 1st July to 30th June.

NUMBER OF DEPARTMENTS

Environment.

Company Secretary
Mr. S.M. Mahboob

Corporate Office
Corporate Headquarters, Korangi Creek Road, Karachi- 75190, Pakistan.

Registered Office
Avari Plaza, Adjacent to Hilton Hotel, 87,Shahrah-e-Quaid-e-Azam, Lahore. Pakistan.

Refinery Office
Qasba Gujrat, Mahmood Kot, Distt. Muzaffargarh, Pakistan

MATERIAL MANAGEMENT
Material Management is concerned about short range decisions about supplies, inventories, production level, staffing patterns, schedules and distribution.

Purchasing
The Purchasing is very important for the organization and continuously seeking to better by the material from supplies. The raw material of PARCO is imported from Saudi Arabia and Abu Dhabi approximately the 60% of raw material is imported from Saudi Arabia.

For equipment and supplies purchases there is equipment and supply committee. A reorder level of the equipment supplies is used and maintains .There is microwave communication system of organization. The organization have direct contact with suppliers. To reach a final agreement the planning about purchase of raw oil and equipment contracts are being shaped.

Distribution
The Distribution means to manage the of flow of materials from manufacturing to consumers and from warehouse to retailers, that are involved storage from transportation of products. PARCO oil refinery is presently using pipeline system road transportation. But now a days it is going to adopt only pipelines transportation. The Parco organization will move for forward and backward placement.

Forward Placement
The forward placement means with retailer and wholesaler locating stock closer to customer .For example the Placement by Machhike terminal station and by the terminal stations of Sahiwal and Kharian.

Backward Placement
The backward placement is used to almost any location and pipeline transportation and through oil tanker.

MATERIAL IMPORTANCE FOR PARCO

Material is important for PARCO because the Refinery will optimize product supply logistics and ensure efficient and economic availability of petroleum products to the central and northern regions of the country, which about for over 60% of the countrys total requirement.

Impact of Material Storage:

Material has the direct impact on the profitability of the organization. Parco cannot keep much more material because if they do so, they will have to bear much more cost of holding.

FUNCTIONS OF THE MATERIAL MANAGEMENT PURCHASING:

Parco will import three vessels per month, approximately carrying 64,000 metric tons each from Saudi Arabia.

SUPPLIER:
The supplier of the crude oil for Parco is ARAMCO. PARCO entered a crude oil sales agreement with ARAMCO for the purchase of 30,000 barrels/day of light ARABIN crude. The agreement was signed at Dahran on Jun 18,2000. CONTRACTING: Contract for the transportation of crude oil for the MID-COUNTRY Refinery, from Saudi Arabia and Abu Dhabi, was signed with Pakistan National Shipping Corporation (PNSC) on July 18,2000.

PERIODIC REVIEW SYSTEM

The second method of inventory control system is periodic review system. In this system the inventory position is judge periodically instead of continuously. In a p system the lot size may change form one order to the next, but time between orders is fixed.

INVENTORY CONTROL SYSTEM AT PARCO PARCO USING THE PERIOD reviews system. It means that lot size vary but the time between orders is fixed. As PARCO will import three vessels per month approximately carrying 64,000 metric tons each, but the first vessel brought 66,000 metric tons of crude oil for the Mid Country Refinery.

Project design And Implementation strategy.

1.Business Design.

In business design they relate the expenditure plan to meet up countary market demand.In this plan the adjust the expenditures in such a way tat they may handle the market demand and they make capacity cusion to avoid the uncertainity.

2.Process design.

The process design consists of Fit for purpose designstrategy.It creats most economic least costengineerig solution to meet the market requirement.Parco tries its best to maintains its economies of scale.

3.Engineering Design.

In engineering design they eradicate all the useless and waste expenses.eg rigorous review of all cost items.They do not do any wasteful expense on technology all expenses are according to requirement.

4.Implementation strategy.
It makes the Supply and construction contracts to create firm cost and project completion with in 36 month.

5.Financing arrangement.

The Parco Oil Refinery is generation of equity with the help of in house resources without the existing share holders to make contribution of additional funds.

Project Facts.
1.Location.

There is Parco Oil Refinery situated at Mahmood Kot, that is surrounded by Muzaffargarh Which is District of Pakistan. Refinery is 65KM away from the city of Multan.Which is connected with the other areas with the help of rails,airline and by road. Nearest area of railway line link is Mamood Kot tht is just 5km from the Parco Oil Refinery. There are two main termal power plants,at the distance of 30 km from refinery ne is at Kot Addu and the otheris at Muzaffargarh that have capacity of 1,500 and 1,300 MW , on the other hand a 762 MW AES Fuel thermal power complex is 5 km away at Lalpir. The refinery is 10-15km away from the river and 35km away from river Chenab.

Advantages Of Refinery Location

The PARCO has following advantages due to location. 1. It has sensible and strategic location according to commercial and national security perspects. 2. About 35 million population is served as major consumer by Parco. 3. The movement of crud oil petroleum products become very easy through pipeline to

different regions of the country it minimize the expenses of the transportation through road or 4. The parco is very near to petrochemical demand Which give benefits for the huge petrochmical growth in future.

2.SUPPLIER
The main suppliers of Qatar,Kowait,and Saudia arabia.The crude oil for Parco is supplied by ARAMCO. The PARCO has made an agreement with ARAMCO for the purchase of 30,000 barrels of oil.This agreement was signed at DAHRAN on 18 JU

Operation strategy

The Operation strategy Of PARCO is concerned with setting of the broad policies for using the resources of production of the firm to fully provide the support to the long-term and short -tem strategy of the firm. There are following operational strategy issues

1.Location 2. Capacity 3. Process 4. Operation 5. Quality

Location.

The refinery is located in Gujrat at Mehmood Kot.The main purpose for starting the project here is the dvelopment of this area. The petroleum marketing companies are serving as a petrolum product distribution terminals.The name of this terminal is Joint Installation of Market Companies abbrivated as JIMCO. Which is linked with the help of pipeline systems with PARCO Mehmood Kot terminal.

With the help of this terminal the refinery produced HSD which is recived from Karachi with Karachi through PARCO Pipeline is filled in rail wagons and road tankers for transportation to various locations in Punjab and NWFP.

PARCOhas another pipeline system known as Mahmood Kot to Faisalabad and then to Machike (MFM) Pipeline system which is originates from PARCO termina of

Mehmood Kot. The Pipeline of Parco carries HSD and Kerosene to Machike

CAPACITY
Capacity is the minimum rate of output for a facility The Refinery complex includes 11 onsite units process units besides numerous off site / utilities units and other permanent facilities with 51 tanks to store the crude oil, intermediate feeds stocks and finished products. PARCOS mid-country Refinery will have a refining capacity of 100,000 barrels per day or 4.5 million tons per annum making it the largest in the country The facilities regarding capacity has been divided in two categories. Process unit capacity Storage unit Capacity

Process Unit Capacities

The Refinery capacity is around 4.5 million tons per annum equivalent to a processing throughput of 100,000-barrels/ day of a mixed Arabian Light/ Upper Zakum/ crude slate, which is being transported to the Refinery site by PARCO's Keamari to Mahmood Kot (KMK) pipeline system from Karachi. The Refinery is processing Crude Oil of Upper Zakhum from Abu Dhabi and Light Arabian Crude from Saudi Arabia. The Refinery Complex includes 11 Onsite Process Units besides numerous Offsite/Utilities Units and other permanent facilities with 46 tanks to store Crude Oil, intermediate feeds stocks and finished products. A summary of the available tank age of the Refinery for various Petroleum Products is detailed below

PROCESS UNITS AND CAPACITIES

Unit code 100 110 200 300 284 130 801 802 411 Unit Crude distillation Vacuum distillation Naptha Hydrotreater CCR platformer Diesel max Visbreaker Kerosene merox LPG merox Gas concentration BPSD 100,000 42,800 25,650 16,350 22,450 15,560 20,000 4,500 Liquid: 22050 Gas: 11.242 (MMSCFD)

810

Amine treating

F.G.: 7.721 (MMSCFD) SWS: 9,963

820

Sulphur recovery

115 MTPD

Storage Unit Capacity

The storage capacity of finished product in PARCO are normally maintained in different Container having different capacity which are as follow.

PRODUCT

STORAGE AT MCR

MS (87 RON) **MS (90 RON) HSD KEROSENE JP-1 OF LDO JP-4 LPG CRUDE

11,000 5,000 56,000 12,000 16,000 34,000 5,000 4,000 2,000 350,000

Capacity Planning In Parco

In PARCO the plans regarding the capacity are made at two levels. Longterm capacity plans deals with the investment in the new facility and equipment. Shortterm capacity plans focus on the work forces, over time budget, inventory and type of decision. PARCO is the capital intensive project. Its long term planning regarding capacity highly depended on installed process unit capacity and demand pattern. In mega and complex project like PARCO there is very less flexibility that installed capacity would increase. Secondly the plant capacity easily serves the customers demand with in the installed capacity (100,000 BPD). PARCO is currently operating at 70 % capacity because demand for the product obtained from naphthalene is low in the country. For the surplus oil production Government of PAKISTAN is now going to export these oil products.

Measure Of Capacity
No single unit capacity measure is applicable to all type of measuring situations in PARCO. Major capacity measures in PARCO are. Barrel Per Day Cubic Meter Cubic Feet Tone But capacity in terms of output measures only in BPD. Because in line flow process output measure is the usual choice for measurement.

The PARCO reach its peak capacity by using marginal method of production such as excessive over time extra shifting and over staffing. The effective capacity rate is to 60 to 65% of plant utilization rate.

Capacity Strategies
PARCO goes for expansionist strategies for capacity decision. The expansionist strategy, which stays a head of demand minimize the chance of sale loss to in sufficient capacity. The other reason of using expansionist strategy and minimize sale loss is the product recycling. This also minimize the wastage therefore, it is also known as an environment friendly project.

Process.
The process mean that involves the use of resources of organization that provides something value. It is the choose of the inputs, operations, workflows and ways that converts inputs into outputs.

4. Operation decisions.

The Operation management of PARCO oil refinery designs the new processes which have strategic implication and they are deeply involved in development and organization of supply chain that link external suppliers and external customers of refinery`s internal processes.The operation managers may also measures the performance of refinery either the oil is purifying at best level or not and all the depertments are performing well or not.These decisions provide the firm a competitive edge.Thedecisions of managers also effect on the different corporate strategies of the organization.

Process Management
The process means involves the use of the resources of the organizatiomto provide something value and the process management means the choosing workflows and methods that converts the inputs into outputs. the inputs, operations,

Process Decision
There are following baises on which the process decisions made by parco. 1. A modern and the substantially modified, product a with good quality which is improved. 2. The demand of the service and product is changing 3.The present performance is not sufficient First decision that a manger makes in deigning operation is to select a process which support its flow strategy Managers have following five process.

1. Project 2. 3. 4. 5. Job process Batch process Line process Continuous process The Parco oil refinery is using Continuous Process from above five. The

continuous process is high end of high volume, standardized, production .

Production Process

The PARCO Oil Refinery intent to purify the crude oil of upper Zakhum which brought from Abu Dhabi and light Arabian crude brought from Saudi Arabia. There are 11 units in refinery complex beside numerous utilities unit and permanent facilities that have approximately 46 tanks for the storage of the crude oil.

Supply chain management

The supply chain management of Parco synchronizes the functions of firm and its supplies to flow of product material and information with customer demand.

Transportation Mode
Parco pipelines network km, and was functioning up to Mahmood Kot near Multan, a distance of 864 on the basis of two pumping stations at Karachi and Shikarpur with an annual pumping capacity of 209 million tons. Two additional pumping stations commissioned in 1994 at Bubak (sindh) and at Fazilpur (Punjab) increased pumping capacity to 4.5 million tons per annum. In June 1997, Parco completed its 364km pipeline extension project and extended its operation to Faisalabad and Machike. The project design is allow for future expansion of the pipeline from Faisalabad to Kharain besides Sahiwal and from Mahmood Kot to Peshawar. It is fast moving to establish a synergy of all these operations in the petroleum downstream sector. AAA and AT ratings by Parco for third successive year are a proof of the sound financial standings of Parco.

Usage of direct expenses

As shown in the Hierarchal Chart (previously) Material Section is controlled by Section Head Materials. Purchase of the new parts is controlled by the In charge of Local Purchase who works under Section Head Materials. In charge of Local Purchase have one supervisor and two clerks under him. They handle the purchase of the inventory. The entire inventory is kept in a Warehouse which is controlled by In charge Warehouse. In charge Warehouse also works under Section Head Materials. Under In charge Warehouse there are two sub-ordinates. One supervisor and two clerks. One is responsible for the book keeping of stored inventory data, and one is responsible for the stored parts. Then the last is In charge Material Control. There are three people working under him, one supervisor and two clerks. They are responsible for coding of the inventory and also to make purchase requisition in case of low level of the inventory.

The Material Section of the Mechanical Maintenance Department is responsible for providing all the necessary spare parts needed for the work of maintenance. This system is currently running manually and all the other systems in the refinery are fully computerized. This thing according to our analysis reduces the efficiency of the Mechanical Maintenance Department and in turn reduces the efficiency of the Refinery as a whole. Lets study it thoroughly.

Order To Finish
It provides information about the work order, how much quantity is ordered, type etc. Complete information is recorded in this table

Field
Order#

Pk / Fk
Pk

Data Type
Number(5)

Description
Identification of serial no. of the order which has a unique numeric value so that duplication is not possible and neither is it possible that an item does not have a unique no.

Order _type

Varchar2(15)

Gives information about the type of order that is sent.

Order unit Unit _cost Work _order

Varchar2(25) Number(5) Vachar2(50)

The units assigned to every order Tells us about the cost of the unit. It tells about part no, shelf life code, additional MSDS etc.

Vendor #

Fk

Number(5)

Tells us who supplies the equipment. This field is used for the relationship with the Vendor table.

Quantity

Number(5)

How much quantity is stored, present or used

Conclusion
The PARCO is an huge project which is producing the different kind of products.It provides professional environment and job security,its salary packages are competentAll parco employees are satisfied with the achievement and feel proud of being members of itParco has achieved the AAA rating which means that Parco always payback credit on time.

References.
Ms.Asma Qurashi Human Resource Manager Parco. Mr. Rashid Mahmood Technologist. Mr.Shahzad Khalid Administration Manager.