The Oil and Gas Regulatory Authority (OGRA) has permitted various refineries to export a cumulative 120,000 metric tons of furnace oil by the end of December 2024 to both boost export revenue and help maintain steady production of other petroleum products.
According to a notification issued by the regulator, it has permitted the Pak Arab Refinery Limited to export up to 50,000 metric tons of furnace oil by the fourth week of December to avoid congestion, subject to local uptake. It has similarly allowed the National Refinery to export up to 30,000 metric tons of high sulfur furnace oil, while Cnergyico Pakistan has been permitted to export up to 40,000 metric tons by the end of December.
According to the Oil Companies Advisory Council (OCAC), refineries exported 430,503 metric tons of furnace oil in the first four months of the ongoing fiscal, compared to 173,437 metric tons in the corresponding period last year.
PARCO currently holds 66,000 metric tons of furnace oil stock; Cnergyico nearly 58,200 metric tons; Pakistan Refinery nearly 45,000 metric tons; National Refinery 25,300 metric tons; and the Attock Refinery around 2,973 metric tons.
The available stock reflects the government’s policy to discourage the use of furnace for power generation, enabling its export. Data provided by the National Electric Power Regulatory Authority (NEPRA) states that furnace oil generated 149 gigawatt hours of electricity in the first four months of the ongoing fiscal year, ending Oct. 31, 2024. In the corresponding period last year, furnace oil generated 1,184 gigawatt hours of electricity.
Over the past three years, the government has been persistently shifting to cleaner sources of energy, including RLNG, coal, gas, and hydroelectricity. Partially motivated by a desire to avail renewables, the decision also reflects economic prudence. Furnace oil is derived from crude, and can prove expensive because prices are tied to global markets.
Due to the prevailing policy, furnace oil consumption declined sharply by 37% to 310,000 metric tons in the five months ended Nov. 30, 2024. In the corresponding period of last year, per the OCAC, total consumption of furnace oil stood at 480,000 metric tons.
In August 2023, the Pakistan government introduced a policy directing local refineries to shift their production to Euro-V standard fuel. The process, estimated to take 4-5 years to complete, would lead to the eventual elimination of furnace oil. The country’s refineries have committed an investment outlay of $4-5 billion to convert their units, potentially saving them billions annually in penalties for non-compliance with environmental regulations.