KARACHI: The refining sector halted fuel oil exports in January as domestic demand surged due to increased power generation from furnace oil-based plants, industry officials said on Tuesday.
The export of fuel oil came to a halt in the month of January after three months as the country exported a huge quantity of fuel oil in the second quarter of this financial year," an industry offcial told The News.
The country had exported a record 434,000 tonnes of fuel oil in the first half of the current fiscal year that began in July, as local consumption fell sharply amid a shift to liquefied natural gas (LNG) for power generation.
The industry exported around 100,000 tonnes of fuel oil in the months of October and November each followed by a record export of 135,000 tonnes in the month of December.
"The refineries had to scrap their plans to export fuel oil in the month of January after the local demand soared as power plants started lifting it for power generation," the official said.
Industrty data showed that the local consumption of fuel oil in the month of January increased by 28 percent compared to the same month of the previous fiscal year whereas it jumped by 132 percent compared to the month of December of the current financial year.
"The fuel oil demand picked up after canal desilting started in the country, which stopped the release of water from dams, thus bringing down the hydel power generation on the lower side," the offcial said.
A drop in hydropower output was the main factor behind the increased use of furnace oil-based power plants to meet the electricity demand.
The extreme weather conditions also played a role, as the shortage of gas led to lower power generation from gas-fired plants. The fog in various parts of the country, especially in Punjab, boosted the gas consumption for heating purposes.
The official said that the refining sector had orders for the export of furnace oil in the month of January, however "its local sale offered the sector a good price compared to the global market as the export price was lower than the local price of the fuel oil".
The export of fuel oil may resume in the second half of this month as one of the officials of a refinery said that they have received the order for its export.
Three refineries - Pak Arab Refinery Limited (PARCO), Pakistan Refinery Limited (PRL) and Cnergyico Limited - mainly export the furnace oil from Pakistan and these refineries exported it in the current financial year.