Furnace oil exports surge to record high as local demand plummets

KARACHI: Pakistan exported a record 189,000 tonnes of furnace oil in January 2025, as the country’s power sector continued to phase out its use due to high costs and environmental concerns.

According to oil sector data, monthly furnace oil exports surged by 113% compared to January 2024 and by 47 per cent from December 2024, marking an all-time high. Cumulative exports for the first seven months of the current fiscal year (7MFY25) grew 63 per cent year-on-year, reaching 895,000 tonnes.

The rise in exports follows the government’s decision to allow refineries to sell surplus furnace oil in international markets, as domestic power plants increasingly opt for alternative energy sources.

Power generation data from the first half of the fiscal year (July-December 2024) revealed that furnace oil now plays an insignificant role in the country’s energy mix. Electricity generation from furnace oil accounted for just 0.2 per cent of total output, down from 2.0 per cent in the same period last year. Meanwhile, the cost of generating power from furnace oil rose by 5.0 per cent year-on-year.

Pakistan’s refining sector is actively working to reduce furnace oil output. Under the new refining policy, refineries are expected to cut high-sulphur furnace oil production by 78%, reducing daily output from 15,500 metric tonnes to 3,400 metric tonnes following planned upgrades.

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 shifts towards more efficient and sustainable practices, demand for high-sulphur furnace oil continues to decline in the domestic market, further reinforcing the trend of rising exports.