KARACHI: Pakistan’s refining industry is gearing up for significant furnace oil exports in the coming weeks, with shipments expected to exceed 100,000 tonnes. The shift towards exports comes as domestic demand for furnace oil has nearly vanished since the start of the current fiscal year.
Pakistan Arab Refinery Limited (PARCO) has already issued a tender to export 50,000 tonnes of furnace oil, while Pakistan Refinery Limited (PRL) is seeking approval from the Oil & Gas Regulatory Authority (OGRA) to proceed with its own export plans. PRL aims to export 50,000 tonnes by the end of this month, followed by an additional 25,000 tonnes in early September.
The sharp decline in local consumption is attributed to power plants ceasing the use of furnace oil for electricity generation due to its high cost. Industry sources reveal that last year, Pakistan exported a record 820,000 tonnes of fuel oil, including 137,000 tonnes in May alone.
Refineries are exporting furnace oil at lower rates than domestic prices to avoid operational disruptions caused by storage limitations. The new refining policy aims to significantly reduce furnace oil production as refineries undergo upgrades, focusing on producing more gasoline and diesel from crude oil. However, progress on refinery upgrades has stalled due to the absence of a sales tax exemption on petroleum products, hindering final agreements with OGRA.
Story by Tanveer Malik
