Cnergyico gets green light to export 30,000 tonnes of furnace oil

KARACHI: The Oil and Gas Regulatory Authority (Ogra) has given permission to Cnergyico Pakistan Limited (CPL) to export 30,000 metric tonnes (MT) of furnace oil (FO).

CPL sought approval for the export late last month, citing an excess supply of furnace oil due to reduced local consumption. “CPL may proceed with the export of 30,000MT FO during the period from November 20, 2024 to December 10, 2024, from the Kemari Port only,” Ogra said in a letter addressed to the refinery.

Furnace oil exports from Pakistan have been ongoing throughout November, with Pak Arab Refinery Limited (Parco) initiating shipments earlier this month.

During the first four months of the current fiscal year, Pakistan exported a record 430,000MT of furnace oil as domestic demand for power generation plummeted. Monthly exports included 116,000MT in July, 66,500MT in August, 114,000MT in September, and 133,700MT in October.

Local refineries have turned to exporting furnace oil as its use in power plants has significantly declined. The government has deprioritised its use for electricity generation due to its high cost. Consequently, power generation from fuel oil dropped by 87 per cent during the first four months of the current fiscal year compared to the same period last year. In October, electricity generation from it was almost negligible.

Under the new refining policy, local refineries are set to drastically reduce furnace oil production. The policy aims to cut high-sulphur FO output by 78 per cent, from 15,500 tonnes per day to 3,400 tonnes per day. The focus is shifting towards producing cleaner fuels, including gasoline and diesel, which meet Euro-V standards.

However, the policy’s implementation faces challenges, particularly unresolved issues related to upgrade agreements. Refineries are demanding the removal of the sales tax exemption on petroleum products, but the government has yet to address this request. Upgraded facilities will aim to maximise gasoline and diesel production while minimising furnace oil output, aligning with environmental standards and modern energy needs.