OMCs buy furnace oil in face of gas shortage

Importing 223,000 tons of oil that can be used for power production


Zafar Bhutta November 24, 2021
Govt allowed power production through furnace oil after coal price skyrocketed in international market and production from hydel sources declined in the country. photo: file

ISLAMABAD:

Owing to diversion of gas to domestic consumers amid looming scarcity, the oil marketing companies (OMCs) have resorted to furnace oil imports as it can be used to produce electricity in the absence of gas.

In this regard, two OMCs - Pakistan State Oil (PSO) and Be Energy (BE) - have shared plans to import over 223,000 tons of furnace oil.

Of the total, PSO has already imported 65,937 tons of high sulphur furnace oil (HSFO) and 52,465 tons of low sulphur furnace oil (LSFO).

While the government directed the OMCs and independent power producers to ensure sufficient stocks of furnace oil, PSO lodged a complaint about the reluctance of power sector to lift oil stocks in line with firm demand.

Given the expected rise in gas demand in the winter season and failure of companies to ensure supplies in line with the demand owing to the cancellation of a liquefied natural gas (LNG) import order, PSO and BE have been tasked to import furnace oil.

The demand for gas is projected to rise from 4,243 million cubic feet per day (mmcfd) in November to 4,474 mmcfd in the coming months.

Gas companies have projected a shortfall of 444 mmcfd in November, 717 mmcfd in December, 951 mmcfd in January 2022, 613 mmcfd in February and 147 mmcfd in March. Under this scenario, the Petroleum Division has forecast the demand for furnace oil at 81,707 tons in November, 168,861 tons in December, 148,392 tons in January next year and 57,337 tons in February.

Sources said that 99,865 tons of HSFO and 21,153 tons of LSFO were available with PSO. On the other hand, domestic refineries have stocks of 31,832 tons.

At present, there are stocks of 211,697 tons of HSFO and 35,153 tons of LSFO in Pakistan. The country is facing deficit of 100,281 tons of HSFO and 35,153 tons of LSFO.

The demand for HSFO from the power sector stands at 31,416 tons in November while PSO is liable to supply 80,000 tons of furnace oil to K-Electric. To meet this, PSO has imported 65,937 tons of HSFO and 52,465 tons of LSFO. It plans to import another 65,000 tons.

Private company Be Energy will import 40,000 tons of HSFO for onward supply to the power sector.

Published in The Express Tribune, November 24th, 2021.

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