Furnace oil exports hit record 933,000 tonnes in eight months

KARACHI: Pakistan exported a record 933,000 tonnes of furnace oil in the first eight months of the current financial year, as the country’s power sector continues to phase out its use due to high costs and environmental concerns.

According to oil sector data, fuel oil exports, however, plummeted to 39,000 tonnes in February, compared to 190,000 tonnes in January.Industry sources attributed the lower exports to an accumulation of furnace oil in local refineries, as buyers prefer to purchase in bulk.

“This is a common trend in furnace oil exports, where one month sees an accumulation of fuel oil and the next records a surge in exports,” a senior official at a local refinery told The News. He noted that March has once again seen a rise in exports, with a single refinery having exported 65,000 tonnes so far this month.

He added that the increase in exports in March follows the government’s decision to allow refineries to sell surplus furnace oil in international markets, as domestic power plants increasingly shift to alternative energy sources.

Power generation data for the eight months of the fiscal year (July-February 2024) revealed that furnace oil now plays an insignificant role in the country’s energy mix.

The data showed that electricity generation from furnace oil contributed almost nothing in February.Therefining 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 per cent, 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.

Despite this, refineries continue to face challenges in disposing of furnace oil, which hampers their refining operations.