PRL set to start exporting furnace oil next month

KARACHI: Having been unable to draw local buyers even months after running into an inventory crisis, Pakistan Refinery Limited (PRL) has decided to start exporting its huge furnace oil (FO) stocks in the first week of February, if there is no improvement in demand, The News learnt on Monday.

PRL has started to shift the FO stock of 24,000 metric tonnes at the storage the company acquired on rent in Port Qasim area of Karachi. The company currently holds a stock of 24,000 metric tonnes of FO at its refinery and is making vigorous efforts to sell it locally and is ready to export it if it is not consumed by domestic Independent Power Plants (IPPs).

PRL is the second refinery to store FO near Port Qasim for export purposes after PARCO that has already stored 58,000 metric tonnes there. “PRL has only two options; either to shut down the refinery or export FO at the discounted price to keep itself operational,” sources told The News.

According to sources, PRL can export FO at a rate of Rs83,000 per metric tonne in the international market and is searching for a potential buyer. Currently the global price of FO is Rs85,000 per metric tonne.

Sources said offering FO at discounted price would cause financial losses to the refinery; however, the price was not an issue at the moment, as disposal of FO was critical for running the refinery. Sources in the refinery sector said the FO uptake issue had not been resolved as government also told in plain words that it couldn’t do refineries any favour.

“If it is lifted by IPPs, then it is fine, otherwise the government can’t do anything in thisregard,” the sources said quoting the government, which held a meeting with the management of the refineries last week. Refineries have also offered to sell FO at discounted price but the situation has not improved for them so far. The import-parity price of FO is Rs98,000 per metric tonne but refineries have offered to sell their FO at lower levels.

The ex-refinery price of National Refinery Limited’s (NRL) FO is Rs79,000 per metric tonne, whereas ex-refinery price of Byco, PARCO, and PRL is Rs83,000 per metric tonne and Attock Refinery Limited (ARL)’s ex-refinery price is Rs93,000 per metric tonne. About the high ex-refinery price of ARL, sources point out that IPPs are lifting its FO as it uses local crude oil.

Sources said the currently local refineries have a total stock of 200,000 metric tonnes of FO and it has created problems in the operational capacity of the refineries.

Sources noted local refineries have now two option either to close down the refineries or export FO and because of it they are offering to sell it at prices lower than local as well as international market ones.