Ogra approves export of 30,000 tonnes of furnace oil by Cnergyico

KARACHI: The Oil and Gas Regulatory Authority (Ogra) has granted Cnergyico Pakistan Limited (CPL) permission to export 30,000 metric tonnes (MT) of high sulphur furnace oil (FO) during the current month.

According to a letter to Ogra, the refinery requested approval for the export of its FO. Last month, the refinery exported 40,000 MT of furnace oil. The export of FO has continued throughout the current financial year due to a slump in domestic demand for the fuel.

Data from the first half of the fiscal year shows that Pakistan exported over 700,000 MT of FO. Of this, 650,000 MT was high sulphur FO, and 56,000 MT was low sulphur FO.

The oil sector noted that the export of FO has become a continuous feature, as the country’s power sector has largely abandoned its use for electricity generation due to its high cost and environmental impact.

In December, the country exported 129,000 MT of FO after three refineries were permitted to export their surplus fuel oil to international markets, as power plants chose not to use it.

Power generation data from the first half of the current fiscal year showed that virtually no power was generated from FO, which no longer plays a significant role in the country’s power generation mix.

The share of power generation from FO dropped to just 0.2 per cent in the first half (July-December) of this fiscal year, compared to 2.0 per cent during the same period last year. The cost of using furnace oil for electricity generation also increased by 5.0 per cent in the first half of the current fiscal year compared to the same period last year.

The local refining sector aims to reduce furnace oil production in the coming year. Under the new refining policy, refineries are set to cut high-sulphur furnace oil output by 78 per cent, reducing daily production from 15,500 MT to 3,400 MT after upgrading refineries. However, these upgrades have been delayed due to disagreements over sales tax exemptions on petroleum products in the current fiscal year. As Pakistan’s energy sector evolves, the focus is shifting toward more efficient and sustainable practices, with less reliance on high-sulphur furnace oil, whose demand continues to decline in the local market.