Diesel output to rise as wheat sowing fuels demand

KARACHI: As the wheat sowing season drives up the demand for diesel, the government has asked local refineries to increase their production of petroleum products, a regulatory authority and industry sources said on Wednesday.

The Oil & Gas Regulatory Authority (OGRA) said in a letter to refineries that they play an important role in the national supply chain of petroleum products and their maximum support is expected to ensure adequate availability of diesel, which is essential for the agricultural sector.

"As the diesel sales across the country have peaked due to wheat sowing season, the maximum support from the refineries is expected to ensure maximum availability of products to maintain healthy supply chain operation."

The letter came after diesel demand soared by 70 percent in the first week of November compared with the previous month.

Pakistan State Oil (PSO), the country’s largest oil marketing company, has also arranged two cargoes of diesel, each carrying 50,000 tonnes, to arrive this month to meet the high demand, sources said.

Diesel consumption rebounded in recent days after it plummeted in the start of the fiscal year in July, when the country did not import any diesel as Iranian smuggled fuel and a slowdown in economic activities reduced demand.

The sources said diesel demand was also boosted by a government crackdown on smuggling of diesel from Iran, as well as an increase in gasoline consumption.

They said diesel demand in the first week of November was 42 percent higher than the same period last year, while gasoline demand was also up.

The country has 464,523 tonnes of diesel in stock, which is enough for 15 days with an average daily consumption of around 31,000 tonnes. The average daily consumption of diesel dropped to below 20,000 tons a few months ago and the stocks were sufficient for 40 days at that time.

Industry officials said the country is importing a large quantity of diesel this month and local refineries have also increased their diesel output to cope with the growing demand.