Pakistan Oct fuel oil exports jump 85% YOY as domestic demand falls

Pakistani fuel oil exports in October jumped 85% year over year to 133,742 mt as domestic consumption dropped, according to data from the Oil Companies Advisory Council.

Fuel exports surged in the month as the government continues to seek cheaper alternative fuels to generate electricity, sources said.

The export volume was also up from around 114,296 mt in September, the data showed.

For the last three years, the Pakistani government has discouraged the use of fuel oil to run power plants, forcing refineries to export the shipments.

Power generation from fuel oil totaled 149 GWh in the four months ended Oct. 31 from 1,184 GWh produced in the same period last year, according to data from the state-run National Electric Power Regulatory Authority.

Refiners exported around 820,484 mt of fuel oil in the year ended June 30, while shipments of light sulfur fuel oil amounted to 134,982 mt. In the year ended June 30, 2023, fuel oil shipments stood at around 276,979 mt, while not a single parcel of light sulfur furnace oil was exported.

Fuel oil consumption declined sharply by 33% to 270,000 mt in the four months ended Oct. 31, compared with 400,000 mt in the same period last year, OCAC data showed.

In August 2023, the Pakistan government introduced a policy calling on local refineries to completely cease production of fuel oil and opt for Euro-V motor gasoline and diesel production, a process estimated to take approximately four to five years to complete.

Pakistan refineries have devised a five-year plan, with an investment outlay of $4 billion-$5 billion, to convert its units to Euro-V production and eliminating throughput of fuel oil.

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

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 a cargo of 30,000 mt each month.

HSFO exports

The state-run Pakistan Oil and Gas Regulatory Authority, which allows gas and oil companies to export, sets prices and authorizes oil and gas imports, gave permission to Cnergyico Pakistan Ltd. to export 30,000 mt of high-sulfur fuel oil, according to a Nov. 21 notification.

The refinery has been allowed to export HSFO until Dec. 10, the notification said.

Cnergyico exported around 55,000 mt of fuel oil i the July-October period, a refinery official said.

Cnergyico has fuel oil stocks totaling 29,000 mt, refinery sources said, citing the latest data as of Nov. 22. Overall stocks held by all refineries stood at around 111,500 mt, according to the data.

Amid cooler temperatures in the Middle East and South Asia and the end of peak summer demand for the utility sector, traders expect steady exports of HSFO towards the Far East region in the near term.

Platts, part of S&P Global Commodity Insights, assessed the Singapore 180 CST HSFO cash premium to the MOPS 180 CST HSFO at an average of $12.11/mt in November, up from $10.88/mt in October.

Platts also assessed the Singapore 380 CST HSFO cash premium to the MOPS 380 CST HSFO assessment at an average of $9.93/mt so far in the fourth quarter as of Nov. 29, above the $8.77/mt average of the third quarter.

(Unit: metric tons)

Pakistani refineries' fuel oil exports