PSO buys fuel oil at steady premiums

Reliance on imports continues to fall since November 2011.

KARACHI:

Pakistan State Oil (PSO) bought 900,000 tons of high-sulphur fuel oil for the second-quarter at prices similar to earlier levels, despite a weakening market, traders said on Thursday.

The country’s largest oil marketing company PSO purchased the cargoes at a premium of $43.00-$46.00 a ton to Middle East spot quotes on a cost-and-freight (C&F) basis to Karachi, roughly steady with previous levels of $44.00-$46.00 a ton for the 180-centistoke (cst) grade.

Demand from Pakistan has weakened since November 2011, with the country cutting imports of fuel oil to 3 to 4 cargoes a month from 6 to 7 cargoes previously, traders said.

High prices and excess supplies had kept the country’s import purchases at a minimal level since the fourth quarter last year, though a new $1 billion World Bank loan to boost electricity supply could permanently shift capacity away from expensive imported fuel oil to low-cost hydropower.

The bank said $840 million of the loan will be used to boost capacity at the Tarbela hydro power project, northwest of Islamabad, by 1,410 megawatts. 

Published in The Express Tribune, March 23^rd, 2012.