Pakistan's fuel oil exports reach record high in Jan as domestic demand wanes

Pakistan's monthly fuel oil exports reached a record high in January, the highest since the country began shipments nearly two years ago, due to weak domestic demand as the government discourages fuel oil usage in utilities.

Oil refineries in Pakistan exported 160,126 mt of high sulfur fuel oil and about 29,331 mt of light sulfur fuel oil, totaling 189,457 mt in January 2025. This topped the previous record of 184,445 mt exported in May 2024, when 136,788 mt of HSFO and 47,657 mt of LSFO were shipped out of the country, according to data from the Oil Companies Advisory Council -- the authority that compiles data on petroleum product consumption, imports and exports.

Pakistan, which used to be a net importer of fuel oil in the past, started exporting the residual fuel grade in February 2022, while it has been exporting on a relatively regular basis, especially from December 2022 onwards, the OCAC data said.

The January HSFO export volume has recorded a year over year growth of nearly 80% compared with January 2024, when 88,976 mt of HSFO was exported and no LSFO shipments were registered, the data showed.

The official data showed that in the seven months of the current fiscal year, between July 2024 and January 2025, the South Asian country exported 809,642 mt of HSFO and 85,137 mt of LSFO, up from 471,900 mt and 27,579 mt, respectively, in the corresponding period a year earlier.

The Pakistan government wants domestic power generation plants to use cheaper alternatives such as coal and gas, prompting refineries to ramp up fuel oil exports.

According to official government data, as of December 2024, the cost of generating electricity from a fuel oil-fired power plant was Pakistan Rupees 30.4/unit, while power generation from regasified LNG was Rupees 22.73/unit, and that from imported coal was around Rupees 19.15/unit.

The government data said the share of electricity generation in the six months ended Dec. 31, 2024, from fuel oil-fired power plants slumped to 0.2% from 2% in the corresponding period a year earlier.

The data further showed that fuel oil consumption declined about 67% on the year to 60,000 mt in January 2025, while it dropped about 45% to 410,000 mt in the seven months to Jan. 31.

Stable bunker demand, tight overall supply buoy Asian HSFO market

Despite Pakistan's fuel oil exports adding to regional supplies, the broader Asian HSFO market remains supported by relatively steady downstream bunker demand and persistent tightness in overall supplies amid recent US sanctions on Russia's energy industry.

Platts, part of S&P Global Energy, assessed the Singapore 380 CST HSFO cargo's cash differential to Mean of Platts Singapore 380 CST HSFO assessments at a premium of $6.25/mt Feb. 20, up from $5.77/mt in the preceding session.

Meanwhile, Platts assessed the front-month crack spread for Singapore 380 CST HSFO against prompt-month Brent crude at plus 29 cents/b on Feb. 20, compared with minus 57 cents/b on Feb. 19, remaining close to its strongest level in more than five years, Platts data showed.

Pakistan has become a net exporter of the residual fuel grade in the last two years, importing no fuel oil from Singapore in 2023 and 2024, after bringing in 30,056 mt from the city-state in 2022, Enterprise Singapore data showed.