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Saturday July 13, 2024

Record 763,000 tonnes of fuel oil exported in 11MFY24

This trade volume is due to low consumption in the local market at a time when refineries produced huge quantities of oil

By Tanveer Malik
June 23, 2024
A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia June 4, 2023. — REUTERS
A view shows oil pump jacks outside Almetyevsk in the Republic of Tatarstan, Russia June 4, 2023. — REUTERS

KARACHI: Pakistan exported a record 763,000 metric tonnes (MT) of furnace oil in the first eleven months of FY2024, according to data released by the oil sector.

This trade volume is due to low consumption in the local market at a time when refineries produced huge quantities of oil.

The country also exported a record 150,000MT of furnace oil in the month of May, performing better than the exports made in the previous months of the current financial year. Pakistan exported a total of 277,000MT of fuel oil in the last financial year.

Officials in the oil sector attributed the record export of fuel oil to low demand. In his statement to The News, an executive of a local refinery said: “As refineries had to operate more for the production of diesel and petrol to meet the local demand, fuel oil was also produced in huge quantities.”

He said fuel oil used to be consumed in substantial quantity in the local market in summer as power plants would begin uplifting furnace oil. This year, however, power plants did not uplift furnace oil, according to the top official.

“In this situation, refineries have no option but to export furnace oil even at a relatively low price -- as the local market always offers higher prices compared to exports,” he added.

He said that the export of fuel oil was also necessary to keep the operations of refineries running as the accumulation of fuel oil the operations as the refineries did not have sufficient storage for it.

The country’s refining sector has been facing the issue of the falling local consumption of fuel oil for quite some time now. However, the sector is geared up for an upgrade once the agreements with the government are signed under the Brownfield Refinery Policy, as refineries will ramp up their production of high-margin petroleum products, petrol and diesel, following a significant reduction in furnace oil output.

The policy, crafted with input from the refinery industry, aims to align local production with Euro V standards, enhancing the output of motor spirit (MS) and diesel while curtailing furnace oil (FO) production.

The upgrade policy is anticipated to enable refineries to increase total production of MS (by 99 per cent) and diesel (by 47 per cent). The production of furnace oil is expected to reduce by 78 per cent.