Cnergyico taps buyers to export overstored furnace oil

KARACHI: Cnergyico PK Ltd, formerly Byco Petroleum Pakistan Limited, has engaged potential buyers including oil giant Exxon to export furnace oil (FO), which is currently overflowing from its storage facilities as local demand has dried up, The News has learnt.

The company earlier failed to broker a deal for the export after it received a bidding at a huge discount, sources in the oil sector confided to The News. Cnergyico is in talks with the international buyers to export huge stocks of furnace oil, which built up after local Independent Power Producers (IPPs) and Oil Marketing Companies (OMCs) refused to lift the heavy fuel, leading to the crisis in the refineries sector.

Sources, however, were not hopeful Cnergyico would be able to clinch a furnace oil export deal this time too because of the fuel’s low prices in global market.

Currently all the refineries are pressing Petroleum Division to intervene and push IPPs and OMCs to lift furnace oil, while they (refiners) explore the option to export.

Two refineries, Cnergyico and Pak Arab Refinery Limited (PARCO), have started storing furnace oil at Port Qasim, according to sources. “Two refineries, producing around 2,500 metric tonnes of it daily, are storing furnace oil to run their operations and make the space for storage of diesel and petrol in their refineries.”

Sources disclosed that Cnergyico had exported furnace oil in 2019 and it was again making same attempts, but low international prices were stymying these efforts.

International crude prices are hovering around $71-$72/barrel, whereas furnace oil was languishing in the range of $57-$58/barrel in the world.

Sources pointed out though furnace oil export was not an attractive option for the refineries, they were trying to fetch as much as they can to dispose of these huge unlifted stocks.

A refinery official said while storage of furnace oil at port Qasim was also costly but in order for the refineries to continue their operations, there was no other option.

“If furnace oil is exported at a good price, then it is okay, otherwise it would remain stored until its demand goes up in February and March,” the official said.

It may be recalled Oil Companies Advisory Committee (OCAC) – a conglomerate of oil sector – had already written a letter to Petroleum Division along with the letters sent by refineries separately for resolving the issue of furnace oil stocks at refineries to ensure smooth operations. Refineries are supplying over 11 million metric tonnes of various petroleum products but due to non-lifting of FO, the refineries, being short on storage, are forced to reduce throughput/close the crude processing, affecting the availability of all other petroleum products eventually disturbing the already fragile supply chain, OCAC had cautioned in its letter.