SINGAPORE: Pakistan’s Pak-Arab Refinery Limited (PARCO) has offered fuel oil for July loading in its latest tender, underlining an ongoing shift in market dynamics as the South Asian country turned to exporting instead of importing fuel oil this summer.
The refinery is offering 50,000 metric tones of high sulphur fuel oil (HSFO) with maximum 3.5 percent sulphur content, for loading at Karachi port between July 15 and 17, based on its website and trade sources.
The tender closes on July 5. PARCO had previously closed a HSFO sales tender in May this year.
Imports of fuel oil into Pakistan slumped in the second quarter this year as companies resorted to burning more coal for power generation due to its cheaper cost and availability.
Monthly imports hit a four-year high in the second quarter last year.
The country’s fuel oil exports have trended higher in 2023 so far compared to 2022, totaling 340,000 tons in Q2 2023. It did not export any fuel in the same quarter last year, data from shipping analytics firm Kpler showed.
The country typically imports fuel oil from the Middle East. Exports have so far gone to Singapore and the United Arab Emirates this year.
The export trend could continue in the coming months as the peak summer demand season is already retreating, with refineries seeking to clear inventories, trade sources said.
Pakistani refineries that produce around 5,000 to 6,000 tons of furnace oil per day have currently over 200,000 tons of it in excess.
The major domestic consumers of furnace oil are power plants, though the current economic crisis, soaring inflation, and massive currency devaluation against the US dollar have pushed the electricity demand toward the lower side, causing local demand for furnace oil to fall below 10 percent.
Currently, out of five oil refineries, the Pak-Arab Refinery and Pakistan Refinery are two major exporters of the oil from Pakistan, while others convert it into bitumen or lube.
Industry officials said the exports of furnace oil were being made at losses to clear the excess stock which risked the operations of the refineries if the situation continued to persist for an extended period.
Keeping in view the subdued demand since November 2022, Pakistani oil refiners feared that the demand for furnace oil will completely fade out in the next one or two years.
