Vitol wins PARCO contract to sell fuel oil abroad

KARACHI: Vitol Group, the world's largest independent oil trader, has secured a contract to sell 50,000 metric tonnes of high-sulfur fuel oil from Pak Arab Refinery Ltd. (PARCO) in the international market, The News learned on Monday.

The deal, sources said, is expected to fetch a lower price than the domestic market rate. The sale price was not disclosed. The fuel oil, a byproduct of crude refining, is used for power generation and marine bunkering.

"The local price of FO is around Rs160,000 per metric tonnes, and the export price of PARCO's latest sale of HSFO to Vitol is around Rs140,000 metric tonnes," sources said.

PARCO said in a statement that it remains fully committed to adhering to all legal and regulatory requirements while promoting honesty and openness throughout its operations.

"As a responsible and ethical organization, we understand the importance of maintaining openness and trust with our stakeholders. While we acknowledge the interest in knowing the financial specifics of our bidding processes, we believe it is paramount to uphold the integrity of the ongoing procedures,” the statement said.

"To safeguard the confidentiality and maintain a level playing field for all the parties involved, we refrain from disclosing the financial details of the bidding processes. We assure you that PARCO remains fully committed to adhering to all legal and regulatory requirements while promoting fairness, honesty, and openness throughout our operations."

Industry sources said PARCO is more interested in selling fuel in the international market to earn dollars to pay the dividend to its foreign partner, which has not been paid since last year after Pakistan faced an acute shortage of dollars.

PARCO is a joint venture between the government of Pakistan and the Emirate of Abu Dhabi. The company, which is the largest oil refinery in Pakistan, has a 60 percent stake held by the government of Pakistan and a 30 percent stake held by Mubadala Investment Company, the investment arm of the government of Abu Dhabi. The remaining 10 percent is held by OMV, an Austrian oil and gas company.

PARCO's major business activities are in refining, transportation, storage, and marketing of fuels in a joint venture with TOTAL of France, as well as marketing and distribution of LPG.

Sources said the foreign partner of PARCO is seeking to repatriate profits worth nearly $65 million, but the government has not released the funds due to a dollar shortage.

Pakistan has been struggling to boost its foreign exchange reserves amid a balance-of-payments crisis that forced it to seek a $3 billion bailout loan from the International Monetary Fund last month to avoid default.