Pakistan's largest refiner to export around 50,000 mt of fuel oil amid weak domestic demand

Pakistan's government has allowed the country's biggest refiner Pak Arab Refinery to export around 50,000 mt of fuel oil by this week, according to a notice seen by S&P Global Commodity Insights late July 12, to reduce stockpile amid low domestic demand.

The state-run regulator Pakistan Oil and Gas Regulatory Authority, which determines gas, petroleum products and LNG prices and procedures, added that the export volume could be up to 10% lower or higher than the targeted 50,000 mt.

Last month, the Pakistan government had allowed three oil refineries -- PARCO, National Refinery and Attock Refinery to export 120,000 mt of fuel over June-July to help reduce stockpiles and optimize refinery operations.

In May, Pakistani refineries had exported around 150,411 mt of fuel oil, up 59.5% on the year, according to data from the Oil Companies Advisory Council, which compiles data for petroleum products consumption, imports, and exports.

In the first 11 months of its fiscal year, which runs from July to June, the country's high sulfur fuel oil (HSFO) exports amounted to 763,453 mt, while low sulfur fuel oil (LSFO) amounted to 88,418 mt, the data showed.

That marked a huge jump compared to the same period in the previous fiscal year, when HSFO exports amounted to just 251,706 mt, while the country did not export LSFO.

Analysts told Commodity Insights that they expect around 80,000 mt to 90,000 mt of fuel oil would be exported in June, based on the available stocks at major refineries in the country.

As of July 9, Pakistani refineries hold around 178,362 mt of fuel oil, down 40.8% on the month, the refinery data showed. Of which, PARCO holds 92,303 mt, National Refinery stores 29,756 mt, Attock Refinery has 25,379 mt, Cnergyico with 21,051 mt and Pakistan Refinery with 9,873 mt.

Compared to a month before in June, PARCO had 139,834 mt of fuel oil, Cnergyico had 59,647 mt, Attock Refinery had 44,448 mt, National Refinery stored 38,132 mt and Pakistan Refinery had 16,110 mt, the data also showed.

Pakistan refineries have been exporting fuel oil in recent years as the government shifts to cheaper power-generation fuel like gas, coal, LNG and hydel, said Farham Mehmood, head of research analyst at Sherman Securities.

In 11 months of the fiscal year, Pakistani fuel oil-fired electricity generation plants produced 2165 Gwh, a decline of 49.2% compared to the same period in the previous year, data from National Electric Power Regulatory Authority showed.

In the same period, Pakistan's overall electricity generation was around 113,705 Gwh, of which 35,142 Gwh arrived from hydel, 21,318 Gwh from RLNG and 21,157 Gwh from nuclear power plants, the data also showed.

Pakistan has not imported a single cargo of fuel oil in the year ended June 30, 2024, as compared with 478,815 mt imported in the previous fiscal year.