Pakistan exports 50,000 tons furnace oil to Singapore

Refineries in Pakistan were facing glut of furnace oil, which was also hampering their operations. Pak Arab Refinery Limited (PARCO) takes the lead by exporting the first cargo of 55,000 metric tons on Sunday night. This opens the door for other refineries to follow the footsteps of PARCO.

According to a report, the tender for this cargo was floated by PARCO at the beginning of December 2022, and Dubai-based E3 Energy DMCC won the tender for the export.

According to the sources in the refining sector, PARCO had to export furnace oil to keep the refinery running. PARCO Managing Director Shahid Mahmood Khan took the decision to export the fuel oil.

If the decision was not taken, the refinery would have shut down due to the accumulation of huge furnace oil stocks. Before the export of fuel oil, PARCO had almost fifty percent of total stockpile with the local refineries following slump in demand.

The demand dropped because thermal power plants stopped stockpiling furnace oil which was on the bottom of the electricity generation merit list. Also, electricity demand had declined due to winter.

As PARCO started accumulating excess furnace oil, which was not being taken by the power plants, it started storing the fuel at Port Qasim for exports.

Reportedly, PARCO sold the stock to a foreign group at free on board (FOB) plus five dollars. Although the export price was low, it would help the refinery keep the operations.

Before the export of 55,000 tons, the country’s total furnace oil stock stood at 592,000 tons. Refineries have 233,000 tons or 39% of the total stock.

Oil marketing companies hold 186,000 tons or 31% of the total stock, whereas power plants carry 172,000 tons or 29% of the total stocks available in the country.

Out of the total stocks with refineries, PARCO held 108,000 tons furnace oil or 46%. That has now reduced to 53,000 tons, following Sunday’s export to Singapore.

Cnergyico has 45,000 tons furnace oil or 19% of total stock carried by refineries.

Attock Refinery Limited (ARL) holds 37,000 tons or 16%.

Pakistan Refinery Limited (PRL) stockpile stands at 25,000 tons or 11%.

National Refinery Limited (NRL) is carrying 17,000 tons or 7%.

It may be recalled that Furnace oil stockpiles started increasing after power plants refused to lift it despite government instructions. Their reason of refusal was the low demand of electricity, which made power generation from expensive furnace oil economically unfeasible.