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Crude Oil, Refined Products, Fuel Oil
January 23, 2025
By Koustav Samanta and Haris Zamir
HIGHLIGHTS
Oil refineries boost fuel oil exports to cut stocks
Lower fuel oil-fired power output dampens domestic sales
Pakistan plans to continue exporting fuel oil in January after the country's outflows of the residual fuel grade jumped nearly 50% year over year in the six months ended Dec. 31, official data showed, as oil refineries boosted shipments to trim surging stockpiles.
Oil refineries in Pakistan aims to export approximately 125,000 mt of high sulfur fuel oil and around 45,000 mt of light sulfur fuel oil in January, industry sources said.
Pak Arab Refinery Ltd (PARCO) currently holds nearly 74,000 mt of HSFO, National Refinery around 38,000 mt, Cnergyico about 26,000 mt, Pakistan Refinery nearly 28,000 mt and Attock Refinery 5,600 mt, while Cnergyico and Attock refineries also hold 26,000 mt and about 39,000 mt of LSFO, respectively, the latest refinery data showed.
This compares with a total of 94,000 mt fuel oil stocks held by the refineries in January 2024, the industry sources added.
Pakistan's fuel oil exports during July-December rose to 649,555 mt, from 433,418 mt in July-December 2023, according to data from Oil Companies Advisory Council -- the authority that complies data for the petroleum product consumption, imports and exports.
The country also exported 55,806 mt of LSFO in the six months ended December, more than doubling year over year, the OCAC data showed.
The Pakistan government has discouraged fuel oil usage in running domestic power generation plants in recent years, prompting refineries to increase exports. Traditionally a net importer of fuel oil, Pakistan is now exporting the residual fuel grade, adding to regional supplies.
Electricity generation from fuel oil in the six months ended Dec. 31 amounted to a meager 152 GWh, against 1,353 GWh produced in the corresponding year-ago period, data from state-run National Electric Power Regulatory Authority showed.
Fuel oil only generated 3 GWh of power in December, dropping significantly from 168 GWh in December 2023, with no fuel oil-fired power generation in November 2024, NEPRA data showed. Sources said reduced consumption by utilities has dampened fuel oil sales in recent months.
Pakistan's fuel oil sales over July-December declined 37.5% year over year to 350,000 mt, OCAC data showed.
In August 2023, the Pakistani government introduced a policy requiring local refineries to cease fuel oil production and opt for Euro-V motor gasoline and diesel production, a process estimated to take approximately 4-5 years to complete.
Pakistan refineries have developed a five-year plan, with a $4 billion-$5 billion investment outlay, to convert their units to Euro-V standards, eliminating fuel oil throughput.
Despite Pakistan's fuel oil exports adding to regional supplies, the broader Asian HSFO market remains buoyed by limited prompt availability and anticipated tighter overall supplies in the near term amid recent US sanctions on Russia's energy industry. However, some traders voiced concerns about weaker feedstock demand from China weighing on the market going forward.
Platts, part of S&P Global Commodity Insights, assessed the Singapore 380 CST HSFO cargo's cash differential to Mean of Platts Singapore 380 CST HSFO assessments at a premium of $8.42/mt Jan. 22, 75 cents/mt lower day over day, but still more than doubling from two weeks earlier.
The benchmark HSFO cash premium has climbed about 31% so far in January, Commodity Insights data showed.
Meanwhile, Platts assessed the front-month crack spread for Singapore 380 CST HSFO against prompt-month Brent crude at minus $2.89/b Jan. 22, marginally dipping from minus $2.64/b Jan. 21, the strongest level since Aug. 22, 2023, when the refining margin was assessed at minus $2.20/b, Commodity Insights data showed.
Pakistan has become a net exporter of the residual fuel grade in the last two years, importing no fuel oil from Singapore in 2023 and 2024, after bringing in 30,056 mt from the city-state in 2022, Enterprise Singapore data showed.
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