Pakistan allows furnace oil export

ISLAMABAD: Pakistan government has allowed export of furnace oil and decided to stop the fuel import in a bid to help oil refineries ease their surplus that threatened to break down petroleum supply chain.

“We have asked refineries to increase their storage capacities and also allowed them to export the surplus, if they have,” The News quoted Minister for Petroleum Ghulam Sarwar Khan.

Pakistan oil refineries had warned the ministry of energy last week that rising fuel oil inventories, driven by the government’s shift to LNG-based power generation, could result in imminent refining shutdowns and a nation-wide shortage of other oil products, especially gasoline and jet fuel.

Consumption is unlikely to recover, as the electricity feedstock landscape continues its switch to gas facilitated by exponential growth in LNG imports, which are expected to increase from 4.9 million mt of LNG in 2017 to nearly 24 million mt/year by 2023, according to S&P Global Platts Analytics.

Pakistan oil sales during five months (July-November 2018) slipped to its more than decade low by posting 33 percent decline to 7.7 million tons primarily because of 68 percent decline in furnace oil (FO) off-take.

“Steep decline in FO was on back of slower offtake from domestic refineries reportedly and shift of national energy mix to other alternatives like RLNG and coal,” Shankar Taleja at Topline Securities said.

The Minister for Petroleum Ghulam Sarwar Khan after a meeting of the Cabinet Committee on Energy said the ministry asked the oil refineries to shift their surplus to the storages of independent power producers (IPPs) and to enhance their storage capacities.

“Pakistan State Oil (PSO) was asked to stop its (furnace oil) import and meet the demand of the KE (K-Electric) from these refineries,” he added.

PSO, being the largest supplier of FO in the industry has been hit the hardest with a 69 percent decline in sales volumes.

The supply glut has been worsened by fuel oil imports, despite a new energy committee, headed by the minister for energy, having been constituted a year ago, to approve fuel oil imports and monitor output from domestic refineries.

Pakistan imported nearly 150,000 mt of fuel oil in October and received another cargo of 68,153 mt November 18, an oil analyst said.

“It is beyond comprehension why fuel oil was imported when even local refineries were finding it hard to sell local production”, he said.

The cabinet committee on energy also decided not to raise price of liquefied petroleum gas and asked the authorities to give relief to common consumers.

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