Pakistan to draw down inventories with 120,000 mt fuel oil exports in Nov

Pakistan refineries are likely to export 120,000 mt of fuel oil and low sulfur fuel oil in November to lower stockpiles and increase production at its unit, refinery sources told S&P Global Commodity Insights Nov. 20.

Fuel oil exports from Pakistan Arab Refinery is expected to be around 50,000 mt in November and Pakistan Refinery 25,000 mt while Attock Refinery will send a parcel of 30,000 mt of light sulfur fuel oil, industry officials said.

Pakistan Refinery has already exported 15,000 mt of fuel oil, the industry officials said.

Attock Refinery, in a briefing to brokerage companies' analysts on Nov. 8, disclosed that the company had exported around 80,000 mt of light sulfur fuel oil in the year ended June 30, 2024.

Exports were made to address reduced ullage/throughput issues, AKD Securities, a Karachi based brokerage firm, said in a report.

The company receives a $60-$70/mt premium over the prevalent export price of RFO, the report said. Consequently, the refiner plans to export cargo of 30,000 mt each month moving forward.

Pakistani refineries aim to reduce fuel oil production over the next three to four years, converting their operations to increase the throughput of Euro-V standard petrol and diesel products, according to government sources.

Refineries exported around 296,761 mt of fuel oil and 26,792 mt of light sulfur furnace oil during July-September compared with 101,021 mt of fuel oil in the same period last year, the data received from Oil Companies Advisory Council, a council which compiles data of petroleum products for consumption, import and exports, showed.

Over July to September 2023, not a single parcel of light sulfur oil was exported.

In August 2023, the Pakistani government introduced a policy that calls on local refineries to completely halt production of fuel oil and opt for Euro-V motor gasoline and diesel production, a process which is estimated to take approximately four to five years to complete, having an investment outlay of $4-$5 billion.

The country's domestic consumption has been on decline for three to four years as the government has been encouraging cheaper mode to generate electricity such as coal, nuclear, solar, wind and RLNG.

Fuel consumption during four months of the current fiscal year dropped by 33% to 270,000 mt as compared with 400,000 mt of the same period corresponding to the year, according to Oil Companies Advisory data.

Pakistan fiscal year runs from July to June.

As per the latest data, PARCO has 35,251 mt of fuel oil stock, National Refinery has stock of 20,889 mt, Cnergyico has stock of 18,669 mt, Pakistan Refinery has 16,755 mt and Attock Refinery has fuel oil stock of 3,375 mt and light sulfur fuel oil stock of 35,721 mt.

In the Middle East, with most of the peak HSFO demand for power generation purposes during the peak summer season mostly ebbed away, cargo availability situation gradually improved since October, softening overall valuations for the grade.

Meanwhile, the Singapore 180 CST HSFO cash premium to the MOPS 180 CST HSFO assessment averaged $12.73/mt Nov.1-19, above the $10.88/mt in October, data from S&P Global Commodity Insights showed.

(Unit: metric tons)

Pakistan refinery fuel oil stock