Pakistan Refineries Approved to Export 185,000 Tonnes of Fuel Oil in August
KARACHI: Pakistan’s oil refineries have received regulatory approval to export around 185,000 metric tonnes of fuel oil in August, while maintaining strategic reserves to meet the requirements of the domestic power generation sector, according to notifications issued by the Oil and Gas Regulatory Authority (OGRA).
Under separate approvals dated August 12, Pak-Arab Refinery Company (PARCO) has been permitted to export 50,000 tonnes, Cnergyico Pk. Ltd. 45,000 tonnes, Pakistan Refinery Ltd. (PRL) 40,000 tonnes and National Refinery Ltd. (NRL) another 50,000 tonnes.
The approvals are conditional on the refineries maintaining sufficient strategic fuel oil reserves to meet the needs of the power sector.
Pakistan’s refineries exported approximately 1.453 million tonnes of fuel oil during fiscal year 2025-26, up from around 1.3 million tonnes in the previous fiscal year, according to data from the Oil Companies Advisory Council (OCAC).
Exports of low-sulfur fuel oil (LSFO) also increased to 180,469 tonnes during FY2025-26, compared with 137,880 tonnes a year earlier.
Declining Domestic Demand
The country’s refining sector continues to face a structural surplus of furnace oil as domestic demand declines. Older refineries, which have relatively high fuel oil yields, are particularly affected by the trend.
According to a report by Karachi-based brokerage Arif Habib Ltd., aging hydroskimming refineries produced furnace oil equivalent to around 21% of total refinery throughput in FY2025-26. The resulting surplus has increasingly had to be exported, often at discounted international prices.
The situation has placed pressure on refinery profitability, with government policies over the past two years discouraging the use of furnace oil for power generation in favour of relatively cheaper and cleaner alternatives such as gas and renewable energy.
Fuel Oil Demand Gets Temporary Boost
Despite the long-term decline in demand, fuel oil-fired power generation increased sharply in July as disruptions to LNG supplies from Qatar affected gas-fired power generation.
Fuel oil-based electricity generation nearly doubled year-on-year to 215 GWh in July, compared with 108 GWh in July 2025, according to Bazif Memon, research analyst at Optimus Capital Management. Generation from fuel oil-fired plants stood at around 100 GWh in June.
Memon said LNG shipments from Qatar declined sharply amid disruptions in the Middle East, forcing the government to rely more heavily on fuel oil-fired power plants.
Pakistan received only five LNG cargoes in July, compared with 10 vessels during the same month last year, he said.
The increased use of fuel oil has provided some short-term support to domestic demand. However, market sources said refinery production continues to exceed the country’s structural consumption requirements.
Asian Fuel Oil Market Remains Tight
Internationally, the Asian high-sulfur fuel oil (HSFO) market remains supported by tight supplies. Uncertainty surrounding shipping through the Strait of Hormuz has disrupted Middle Eastern oil flows and contributed to higher downstream bunker premiums.
According to Platts, the Singapore 380 CST HSFO cargo cash differential reached a $33.39 per tonne premium on August 19, its highest level since May 6.
Singapore imported 92,459 tonnes of fuel oil from Pakistan in June, but no shipments from Pakistan arrived in July or during the first part of August, according to Enterprise Singapore data compiled by Platts.
While the Asian HSFO market remains tight, traders expect supplies to gradually increase as the summer power-generation demand season winds down, potentially easing market conditions in the coming weeks.
Story by Koustav Samanta and Haris Zamir
