Record exports of 763 thousand tons of fuel oil in 11MF24

KARACHI: Pakistan exported a record 763,000 metric tonnes (MT) of fuel oil in the first eleven months of FY2024, according to data released by the oil sector.

This trade volume is due to low consumption on the local market at a time when refineries were producing huge amounts of oil.

The country also exported a record 150,000 tonnes of fuel oil in May, outperforming exports made in the previous months of the current financial year. In the last financial year, Pakistan exported a total of 277,000 tonnes of fuel oil.

Oil sector officials attributed record fuel oil exports to low demand. In a statement to The News, a local refinery executive said: “As refineries had to work harder to produce diesel and gasoline to meet local demand, heating oil was also produced in huge quantities.”

He said that in the summer, heating oil was consumed in significant amounts in the local market when power plants started extracting fuel oil. However, according to a top official, power plants have not increased fuel oil levels this year.

“In this situation, refineries have no option but to export fuel oil even at a relatively low price as the local market always offers higher prices compared to exports,” he added.

He stated that the export of fuel oil is also necessary to maintain refinery operations, because the accumulation of fuel oil means that refineries do not have sufficient storage facilities.

The domestic refining sector has been struggling with the problem of declining local fuel oil consumption for a long time. However, the sector is poised for modernization following the signing of agreements with the government under the Brownfield Refinery Policy, as refineries will increase production of high-margin petroleum products, gasoline and diesel, after significantly reducing furnace oil output.

This policy, developed with the participation of the refining industry, aims to adapt local production to Euro V standards, increase the production of motor gasoline (MS) and diesel oil while limiting the production of fuel oil (FO).

The modernization policy is expected to enable refineries to increase their total production of MS (by 99%) and diesel (by 47%). Heating oil production is expected to decrease by 78%.