Cnergyico gets approval to export 40,000 tonnes furnace oil

KARACHI: The Oil and Gas Regulatory Authority (Ogra) has granted Cnergyico Pakistan Limited (CPL) permission to export 40,000 metric tonnes (MT) of high-sulphur furnace oil (HSFO) this month, citing excess stock and reduced local demand.

In a letter to CPL, Ogra allowed the refinery to export 20,000MT of HSFO from Kemari port in the coming days, with an additional consignment of 20,000MT scheduled for the fourth week of December 2024.

The decision comes as domestic demand for furnace oil has dwindled significantly, with power plants deprioritising its use for electricity generation due to high costs. 

According to data obtained by The News, the country has 453,000MT of furnace oil stocks. Refineries have 225,000MTs of furnace oil stocks, and the rest is with oil marketing companies (OMCs) and power plants.

Among refineries, Pak Arab Refinery Limited (Parco) leads with 32,300 MT, followed by CPL with 24,200 MT. National Refinery Limited has 5,500 MT, while Pakistan Refinery Limited and Attock Refinery Limited hold 2,900MT and 1,400MT, respectively.

Pakistan has turned to exporting furnace oil due to its diminished role in domestic power generation. A record 430,000MT was exported in the first four months of the current fiscal year, with monthly exports comprising 116,000MT in July, 66,500MT in August, 114,000MT in September, and 133,700MT in October.

Electricity generation from furnace oil plummeted by 87 per cent during this period compared to the same timeframe last year. In October, its use in power generation was nearly negligible, reflecting the government’s policy shift toward cost-effective alternatives.

Under the new refining policy, local refineries are set to significantly reduce furnace oil production. The policy aims to cut high-sulphur furnace oil output by 78 per cent, reducing daily production from 15,500MT to 3,400MT after refinery upgrades. However, these upgrades have faced delays due to disagreements over sales tax exemptions on petroleum products in the current fiscal year. As Pakistan’s energy sector evolves, the focus remains on transitioning to more efficient and sustainable practices, with reduced reliance on high-sulphur furnace oil.