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.
