Pakistan exports over 0.5 million tonnes of furnace oil as domestic demand drops

Pakistan exported more than half a million metric tonnes of furnace oil (FO) during the first four months of the current fiscal year as domestic demand continued to decline sharply, industry data showed.

The country shipped 452,787 metric tonnes of high-sulphur furnace oil (HSFO) and 54,302 metric tonnes of low-sulphur FO between July and October. Monthly exports stood at 69,625 tonnes in July, surged to 208,000 tonnes in August, dropped to 27,355 tonnes in September, and rose again to around 200,000 tonnes in October.

Industry officials said exports increased mainly because the federal budget imposed a petroleum levy (PL) of Rs82,077 per tonne and a carbon support levy (CSL) of Rs2,665 per tonne on domestic FO sales, pushing up local prices and further reducing demand.

FO sales fell 27% to just 0.07 million tonnes in July–October, compared with 0.27 million tonnes in the same period last year. The power sector, which already uses limited FO due to high generation costs, consumed only 48 megawatts of furnace-oil-based electricity in October out of a total 9,886MW produced nationwide, down 51% from 97MW in September.

Sector officials said FO consumption is expected to decline further, forcing refineries to continue exporting the product even though global prices remain unattractive. They added that delays in the approval of the brownfield refinery policy are complicating matters for refiners, who argue that upgrades would help reduce FO output over time.