Pakistan's fuel oil exports rise 9% in Dec as demand from domestic utilities wane

Pakistan's fuel oil exports surged 9.1% year over year in December amid subdued domestic demand for the residual fuel grade as utilities increasingly opt for cheaper alternatives such as coal, regasified liquefied natural gas (RLNG) or solar power.

The South Asian country, which has transformed from being a net importer to a regular exporter of fuel oil in recent years, shipped 137,500 metric ton of fuel oil in December, compared with 126,055 mt in the corresponding month a year earlier, according to data from Oil Companies Advisory Council. This has beaten the earlier export estimates from refiners for the last month of 2025, at least three Karachi-based industry officials told Platts, part of S&P Global Energy.

Over the last two years, the government of Pakistan has actively discouraged the use of fuel oil or furnace oil for power generation, favouring cheaper and cleaner alternatives such as gas and renewables, and that has led to mounting stockpiles at terminals amid limited local demand, pushing refiners to bank on exports as the only viable outlet.

The fuel oil-fired electricity generation plants, which used to contribute more than 20% of the total power generation in the country a decade ago, have now plummeted to a meagre 0.2% by the end of 2025, according to an official document from the National Electricity Power Regulatory Authority (NEPRA) as of Jan. 21.

Pakistan's fuel oil consumption in the six months ended Dec. 31, 2025, has more than halved to 160,000 mt, compared with 350,000 mt that was used during the corresponding period in the previous year, according to the data from OCAC -- the authority that compiles data on petroleum product consumption, imports and exports.

Meanwhile, the country has exported about 760,191 mt of fuel oil over the six months between July and December 2025, a nearly 18% increase from 646,644 mt shipped during the corresponding period in 2024, the OCAC data showed.

The country's refineries also exported about 87,316 mt of low sulfur fuel oil during the six-month period, compared with LSFO outflows of 55,806 mt in the preceding year, the data showed.

As per data received from industry sources in the week ended Jan. 23, Pak Arab Refinery Ltd. (PARCO) held HSFO stocks of 85,000 mt, Pakistan Refinery had 37,000 mt, Cnergyico Pk Limited had 28,000, while National Refinery and Attock Refinery had stocks of 20,000 mt, and 9,000 mt, respectively. Meanwhile, Attock Refinery also had 4,000 mt of LSFO, refinery officials said.

The refineries plan to export about 125,000 mt HSFO and nearly 38,000 mt of LSFO in January, according to the industry officials.

Pakistan's oil refineries would likely export up to 90% of the fuel oil produced in the current fiscal year, as the government's latest budget has imposed a petroleum development levy of around Pakistan Rupees 82,077/mt and carbon tax of Rupees 2,665/mt to discourage the usage of fuel oil in domestic industries, accelerating the pace of exports, Platts reported earlier.

On average, the cost of power generation from fuel oil costs about Rupees 47.57/unit, while the cost of generation from RLNG is around Rupees 30.85/unit, coal nearly Rupees 25.57/unit, while from solar is about 26.73/unit, and from nuclear is Rupees 19.29/unit, according to data collected from the National Electricity Power Regulatory Authority.

Power generation needs from fuel oil typically see an uptick during the peak winter months as snowfall and freezing temperatures slow rivers, dampening hydel power generation. However, local market sources said the fuel oil-fired utilities have not seen any such support so far this year.

Pakistan's electricity generation from hydel power plants dropped nearly 14% on the year to 1,534 GWh in December, while the country's reliance on power generation from coal-fired utilities surged over 40% year over year to 4,173 GWH in December 2025, NEPRA data showed.

Asian market fundamentals

The Asian high sulfur fuel oil HSFO market remains supported by relatively healthy downstream bunker demand, but trade sources said seasonal lack of power generation demand from South Asian countries such as Bangladesh and Sri Lanka would likely continue to weigh on the 180 CST HSFO grade in the coming weeks, until peak summer utility demand starts picking up.

Platts assessed the Singapore 380 CST HSFO cargo's cash differential to the MOPS 380 CST HSFO assessment at a premium of $2.47/mt at the Asian close Jan. 23, jumping $1.72/mt day over day, hitting its highest since June 26, when it was assessed at $4.18/mt, Platts data showed.