Refineries set to resume fuel oil export after local demand wanes

KARACHI: The refining sector is set to resume exporting furnace oil as one of the refineries recently received approval from the Oil & Gas Regulatory Authority (OGRA) to export 25,000 tonnes of High Sulphur Furnace Oil (HSFO), industry officials said on Wednesday.

The permission, detailed in an OGRA letter, comes after Cnergyico Pk Limited (CPL) requested to export fuel oil, with the shipment expected by April 5, 2024.

Following in the footsteps of the CPL, Pakistan Refinery Limited (PRL) has also sought permission from OGRA to export fuel oil and, according to industry officials, PRL is waiting for the approval, which is expected to be granted in the next few days.

"Pak-Arab Refinery Limited (PARCO) is also in the process of exporting 50,000 tonnes of fuel oil after its stocks exceeded 100,000 tonnes," the official said.

The refineries exported a record 522,000 tonnes of fuel oil in the first seven months of the current financial year; however, they stopped exports in February after the fuel oil was consumed locally.

Refineries didn’t export fuel oil in February when domestic consumption increased for power generation. According to the figures, the highest export of fuel oil was recorded in December when the country exported over 135,000 tonnes; however, it dropped in January when local power plants started lifting the furnace oil for power generation, and its export dropped to 89,000 tonnes that month.

The month of February didn’t see any export of fuel oil after the local refineries were able to sell it in the local market, and it was expected that the refining sector would resume exporting the fuel oil in March after the local consumption had dropped significantly.

Presently, the local refineries are sitting on over 224,752 tonnes of fuel oil, with PARCO having 110,000 tonnes of the stocks, which is almost half of the total stocks the local refineries currently possess. CPL and Attock Refinery Limited have stocks of 35,000 tonnes of fuel oil each. National Refinery Limited and PRL have 26,000 tonnes and 17,000 tonnes of fuel oil stocks, respectively.

Refineries hold fifty percent of the total fuel stocks in the country, as oil marketing companies and the power sector also have 24 percent and 31 percent of stocks, respectively, as the total stocks in the country exceed 500,000 tonnes.