Fuel oil exports jump record 122 percent in 10 months

Tanveer Malik
Tuesday, May 21, 2024

KARACHI: Pakistan exported a record 613,000 tonnes of fuel oil in the first 10 months of the fiscal year, as domestic demand plummeted due to a shift to cleaner energy sources and high electricity prices, industry officials said on Monday.

The country's fuel oil exports began in September and continued to grow, except for a brief dip in January when hydel power was low, according to data from the oil sector.The country exported 613,000 tonnes of fuel oil in the first ten months of this financial year. The country exported 277,000 tonnes of furnace oil in the last financial year, whereas it exported around 50,000 tonnes in the financial year that ended on June 30, 2022.

“The export of fuel oil grew massively in the current fiscal year after power generation from it has been continuously falling over the months,” a senior industry official told The News.He said that fuel oil is at the bottom of the priority list of fuels to be utilized for power generation because it is expensive.

"The government has been attempting to generate power from the least expensive fuels after electricity prices have skyrocketed in the country, burdening the local consumers and triggering an outcry from the public."

The industrty data showed that the export of fuel oil started in September of this fiscal year and kept on growing except in January when hydel power was at its lowest and fuel oil was consumed to meet the demand for electricity.

Offcials said that the export of fuel oil has been continuing in the month of May, as one refinery exported 27,000 tonnes of fuel oil and has been planning to export another 25,000 tonnes in the coming days, whereas another refinery has also exported 50,000 tonnes.

The country’s refining sector has been facing the issue of local consumption of fuel oil for quite some time and has had to export, even at what sector people said are low prices, to keep the refinery operations running.

However, the sector is geared up for an upgrade once the agreements with the government are signed under the Brownfield Refinery Policy, as refineries will ramp up production of high-margin petroleum products, petrol,and diesel, following a significant reduction in furnace oil output. The policy, crafted with input from the refinery industry, aims to align local production with Euro V standards, enhancing the output of motor spirit (MS) and diesel while curtailing furnace oil (FO) production.

The upgrade policy is anticipated to enable refineries to increase total production of MS (by 99 percent) and diesel (by 47 percent). The production of furnace oil is expected to reduce by 78 percent.