Most of Pakistan’s oil refining capacity goes unused. Could selling fuel to ships make them productive?

Recently, Pakistan saw the commencement of landmark bunkering services at the Karachi Port. Spearheaded by Vitol, the largest independent energy trader in the world, the initiative aims to provide between 500,000 and 600,000 metric tonnes of bunker fuel to ships and vessels every year across Karachi Port, Port Qasim, and outer anchorage areas.

It is a forward-looking project, and aims to usher in a new chapter in Pakistan’s maritime and industrial history. A key way in which it seeks to do this is by working on the capacity utilisation of Pakistan’s oil refinery infrastructure. Given that around 37 percent of Pakistan’s refining capacity goes unutilised, this looks to be one way of trying to bump the utilisation percentage up. In fact, according to some industry estimates, the sort of bunker fuel handled at this bunkering platform might come to constitute 40 to 50 percent of the total refined oil output of Pakistan.

This development must be understood in the context of Pakistan’s oil industry. Mainly reliant upon imports to supply the demand for crude oil as well as petroleum products, oil appears as the biggest liability on Pakistan’s import bill. In FY2025, for instance, import shipments of oil and petroleum products were worth $11.3 billion, almost 20 percent of Pakistan’s total imports by value in the period. At the same time, refineries are not working at capacity levels, making petroleum imports for local usage a necessity.

There is also a shift happening within Pakistan’s petroleum refinery ecosystem. As the government is providing financial disincentives in the form of heavier levies and taxes on the use of furnace oil, the demand for these is decreasing. While earlier Pakistan relied partly on imports to sustain the demand of furnace oil, in the past 3 fiscal years, we have essentially stopped importing furnace oil.