LAHORE: Pakistan’s decision to move to Liquefied Natural Gas in place of furnace oil for fuel generation purposes has created a conundrum for refineries and oil marketing companies.
To offset the damage of environmentally polluting furnace oil, Pakistan State Oil the country’s largest oil marketing company is contemplating to swap shipment of LNG cargoes in return for exporting the fuel abroad.
PSO has over 1 million tons of crude stockpiled and oil refineries have also joined the bandwagon of pondering exporting surplus oil available at their disposal. PSO besides its financial crunch, is said to be paying $15,000 demurrages per day per ship for non-lifting of furnace oil imported.
According to Express Tribune, Byco Petroleum is said to have started talks with international buyers for selling of surplus furnace oil they have in stock. This development comes amidst the breaking down of talks over the restarting of oil-based power plants with the government, said an industry official.
Byco has the largest oil refinery in the country with the capability of outputting 120,000 barrels per day, but it has remained closed since the last few weeks due to low off-take of furnace oil.
The official said if Byco is holding 40,000 tons of furnace oil, other refineries like Pakistan Refinery and National Refinery will follow suit by initiating talks for exports and to help kickstart production again.
Exports of furnace oil will permit refineries to restart production and put an end to losses being incurred due to plant closures and heavy demurrages on being unable to lift imported crude standing at the docks.
In October, PM Abbasi ordered phasing out of power plants dependent on expensive furnace oil for generation and be converted to gas as soon as possible in view of the availability of ample gas for the power sector.
This stirred the hornets’ nest as pandemonium hit the oil and gas sector, and created a power crisis as plants suddenly went offline at start of November. Not only did it cause major impediments for oil refineries across the country, but created headaches for PSO which had ordered several shipments of the commodity for power-generation purposes.