Pakistan's fuel oil exports near two-year high

Pakistan's fuel exports almost reached the highest level in two years — since the commencement of exports — in January as domestic demand slumped after the government discouraged their use for cheaper energy sources.

Refineries exported the highest-ever shipments — amounting to 160,126 metric tons — of high sulphur fuel oil and 29,331 MT of light sulphur fuel oil in January, surpassing the previous record of 136,788 MT of high sulphur fuel oil and 47,657 MT of light sulphur fuel oil recorded in May 2024, according to the data of Oil Companies Advisory Council or OCAC — an authority which compiled data of consumption, imports and exports.

Pakistan refineries started exporting fuel oil from February 2022 and from December 2022, it commenced shipments on a regular basis barring a couple of months where no exports were recorded, the OCAC data said.

January exports recorded a growth of 80% over the same month last year when 88,976 MT was exported, while no shipment of light sulphur fuel oil was registered, the data said.

The Pakistan government has been discouraging usage of fuel oil to run electricity generation plants for the last over three years, forcing refineries to export shipments.

Electricity generation from fuel oil in the six months ended Dec. 31 amounted to 152 gigawatt hours (GwH) compared with 1,353 Gwh produced in the same period in the previous year, according to data received from National Electric Power Regulatory Authority, a state-run authority which complies data related to electricity consumption and sets prices.

In December, only 3 Gwh was generated while in December 2023 generation was around 168 Gwh. In November, not a single unit was generated from fuel oil, the data revealed.

The cost to generate electricity from fuel oil-fired plant amounted to PKR 30.4/unit while generation from regasified liquid natural gas amounted to PKR 22.73/unit and that from imported coal around PKR 19.15/unit in December, the government data said.

The share of electricity generation in six months ended Dec. 31 from fuel oil-fired plants slumped to 0.2% from 2%, the government data said. During the period, nearly 66,641 Gwh electricity was produced across the country as compared with 68,892 Gwh produced in the same period last year, the data said.

Following the decline in sales from fuel oil-generated electricity plants, consumption domestic dried up.

Fuel oil consumption in January declined by 68% to 60,000 MT compared with 180,000 MT during January 2024. In the seven months of the current fiscal year, its consumption showed a fall of 46% to 410,000 MT compared with 750,000 MT of the same period corresponding year.

During July to January, the country's refineries exported high sulphur fuel oil amounting to 809,642 MT compared with 471,900 MT of the same period a year ago, according to the data. Light sulphur fuel oil exports amounted to 85,137 MT compared with 27,579 MT of the same period corresponding to the year.