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November 27, 2020

PSO floats tenders to accumulate oil supplies

Business

November 27, 2020

KARACHI: State-owned Pakistan State Oil (PSO) has floated several tenders to procure petroleum products to ensure ample availability of fuel in the New Year, it was learnt on Thursday.

PSO has invited bids for supply of three motor gasoline cargos of 45,000 tons each in January 2021, along with one standard size cargo each of high sulphur fuel oil and low sulphur fuel oil. PSO would also receive one cargo of jet fuel in January.

Market sources said PSO’s stock position was at a comfortable level and there was no threat to smooth supplies across the country.

A couple of months back, people were seen flocking at the petrol stations that ran dry amid lockdown-driven transportation shortage and significant reduction in domestic oil prices.

The normalcy resumed when prices of petroleum products were raised substantially.

PSO has largely scaled back its fuel oil imports since the end of 2017 as the country turned to liquefied natural gas (LNG) to fuel its power sector.

Before turning to LNG, Pakistan was a major importer of fuel oil with monthly imports averaging at about 400,000 to 650,000 tons of fuel oil in 2017.

Domestic oil sales during October touched a two year high with 1.7 million tons of petroleum products being sold in the country. This reflects an 11 percent sequential increase, backed by a sharp 43 percent sequential increase in high speed diesel (HSD) demand.

The strong demand for retail fuels was more than sufficient to compensate for the 22 percent sequential decline in demand for furnace oil (FO).

A yearly comparison shows that demand in the black oil segment rose 46 percent as the power sector opted towards FO to fill in for the gas shortage in winter. Moreover, there was a modest increase of in demand for motor gasoline and HSD.

Cumulatively for 4MFY21 (July-October 2020), petroleum products sales increased 9 percent, clocking in at 6.4 million tons as compared to 6 million tons in the same period last year.

FO registered the highest volumetric increase of 33 percent standing at 1.2 million tons as opposed to 0.9 million tons last year. On the other hand, motor gasoline and HSD sales depicted an uptick of 6 percent and 8 percent, respectively.