Thursday June 30, 2022

Fuel oil stocks pile up to 145,000 tonnes; IPPs limit buying

January 07, 2022
Fuel oil stocks pile up to 145,000 tonnes; IPPs limit buying

KARACHI: Furnace oil glut in the domestic market is touching 145,000 tonnes now; with independent power producers (IPPs) continuing to practice restraint in buying stocks held by refineries, latest figures available with The News showed on Thursday.

Out of the five refineries with furnace oil stocks piling up, three went for suspension of their operations for some time. IPPs have not been buying furnace oil for power generation for the past several weeks, creating operational and storage constraints for the refineries, with some compromising to sell at lower rates.

Although, some buying has been witnessed in recent days on part of IPPs, the quantity was not enough to dispose of the huge stocks of held by refineries.

Latest furnace oil utilisation figures on Wednesday showed that the IPPs burnt only 4,823 tonnes for power generation. Of this, 2,200 tonnes was low sulphur furnace oil (LSFO), which was only produced by

Attock Refinery Limited (ARL) in Pakistan. All the other refineries produce high sulphur furnace oil (HSFO). Currently, 6,000-7,000 tonnes of HSFO were being produced by four refineries other than ARL.

Sources in the oil sector said, “LSFO is being lifted from ARL, but not HFSO from other refineries.”

This they said was being done “out of compulsion to keep ARL operational”, as it utilises locally produced crude oil, “which if not utilised will adversely impact gas production”.

This arrangement, the sources informed was integral due to the current energy crises affecting the domestic and industrial sectors that were bearing the brunt of gas shortage in the country.

The furnace oil glut has been created due to the ill-planning of the government, which also imported the fuel oil for power generation in winter when electricity production from gas drastically declines.

As per the data, Pak-Arab Refinery Limited (PARCO) has 88,000 tonnes, National Refinery Limited (NRL) has 28,300 tonnes, Pakistan Refinery Limited (PRL) has 16,000 tonnes, Cnergyico PK Ltd 11,000 tonnes, and ARL has 3,000 tonnes of furnace oil.

A couple of days ago, PARCO floated a tender for sale of its HSFO, which the company was storing at Port Qasim for exports. PARCO received a bid of Rs72,000/tonne for the HSFO against its ex-refinery price of Rs86,000/tonne.