Pakistan’s fuel oil exports jumped 29% to 172,905 metric tons in October, compared with 133,742 tons in the same month last year, as domestic demand weakened further with industries shifting to cheaper alternatives such as coal, solar power and RLNG.
Refiners are expected to ship more than 120,000 tons of fuel oil in November, higher than earlier projections, an industry official told Nukta.
The government has discouraged fuel oil use in power generation for years, prompting a sustained decline in consumption. The share of furnace oil-based electricity generation has fallen to just 0.2%, compared with more than 20% a decade ago, according to government documents.
Consumption plunges
Fuel oil consumption in October dropped 52% to 30,000 tons from a year earlier, the Oil Companies Advisory Council said. For the four months ending Oct. 31, consumption tumbled to 72,000 tons, down sharply from 270,000 tons in the same period last year.
Fuel oil exports in July to October totaled 452,787 tons, slightly higher than the 430,503 tons shipped a year earlier, the OCAC data showed.
Refineries also exported 54,302 tons of light sulfur fuel oil during the same period, up from 26,792 tons a year ago, according to the data.
In a separate development, Cnergyico became the first Pakistani refinery to produce and export a 24,000-ton cargo of very low-sulfur fuel oil through the bunkering supply stream, Vice Chairman Usama Qureshi told S&P Global on Tuesday. He said the refinery plans to export more cargoes to the bunkering market in the coming months, depending on demand.
Industry officials said refiners’ stock levels indicate November exports could reach 120,000 tons of fuel oil and about 26,000 tons of light sulfur fuel oil.
Industry data shows PARCO holding 90,000 tons of fuel oil, Cnergyico 28,000 tons, Pakistan Refinery 27,000 tons, National Refinery 23,000 tons and Attock Refinery 9,000 tons. Attock Refinery also has about 30,000 tons of light sulfur fuel oil.
Fuel oil still costly
Though furnace oil-based power generation has risen slightly in some recent months, it remains one of Pakistan’s costliest energy sources.
In October, the average cost of producing electricity from fuel oil was about PKR 32.69 per unit, compared with PKR 21.06 per unit from RLNG, PKR 13.45 from coal, PKR 13.36 from domestic gas and PKR 2 from nuclear power, according to data from the National Electric Power Regulatory Authority.
Pakistan’s refineries may export up to 90% of all fuel oil they produce in the current fiscal year after the federal government imposed steep new taxes in the latest budget, including a petroleum development levy of about PKR 82,077 per ton and a carbon tax of PKR 2,665 per ton. The levies were designed to discourage domestic use and accelerate exports, an industry official said.
Another official said the higher tax burden is already speeding up the shift toward exports.
In the fiscal year ending June 30, Pakistan’s refineries produced about 2.457 million tons of fuel oil, compared with 2.47 million tons a year earlier, while exports surged to 1.3 million tons from 820,000 tons in the prior year, OCAC data showed. Exports of light sulfur fuel oil rose about 2% to 137,880 tons.
Cnergyico, Pakistan’s largest refinery, recently imported its first cargo of U.S. crude amounting to one million barrels. Two additional shipments are expected in November, with a third due in January.
Refineries are increasingly turning to alternative crude blends to reduce fuel oil output and boost yields of more lucrative products such as diesel and motor gasoline, an industry official said.
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