Pakistan PSO seeks winter fuel oil as gas supply falls

: Oil products
20/10/08

Pakistan's state-owned marketer PSO is back in the spot market seeking fuel oil on a shortage of domestic natural gas supplies in the country during winter. PSO is also seeking low-sulphur fuel oil (LSFO) in its most recent tender, an unexpected move after Pakistan did not import LSFO in 2019.

PSO has issued three spot tenders this week seeking to import both high-sulphur fuel oil (HSFO) and LSFO for delivery in November-December. According to traders, PSO has tendered to import two 60,000-65,000t cargoes of 120cst LSFO with 0.9-1pc sulphur and four 65,000-70,000t cargoes of 180cst HSFO with 3.5pc sulphur. In the third tender, PSO sought to import HSFO for delivery in 31 October-4 November but the volume could not be confirmed.

Pakistan typically experiences significant domestic demand for gas in the winter, especially between December-January. The gap between the supply and demand for gas is widening on shrinking domestic gas production, according to a market participant based in Pakistan. The power needs that were usually met through the use of gas during winter will have to be met with furnace oil and LNG imports, he said.

This is also the first time in over a year that PSO is seeking LSFO. Traders said that even domestic LSFO production will not be enough to meet demand for power generation use, given a shortage of power generation feedstock. Attock Petroleum is the only refinery in Pakistan that can produce LSFO with sulphur content lower than 1pc and it is only producing about 20,000 t/month of LSFO. Traders expect that Pakistan will need more than 150,000t of LSFO as a power generation source during December.

Pakistan is also a regular importer of HSFO during the peak summer months. Despite the January 2018 ban on importing HSFO, PSO has returned to the spot market with ministry approval every year for cargoes to be delivered between July-October. PSO has sought 455,000t of 180cst HSFO so far this year, for delivery between July-October.

Market participants suggest that the firm could be importing both fuels to fill an expected gas deficit in Pakistan this winter on dwindling domestic natural gas production. Domestic natural gas production has declined as a result of many foreign companies' divestments from the country's gas blocks more than 10 years earlier amid domestic militant violence.

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24/11/21

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Cop: Talks in Baku torn between mitigation and finance

24/11/21

Cop: Talks in Baku torn between mitigation and finance

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Cop: EU, four countries commit to 1.5°C climate plans

24/11/21

Cop: EU, four countries commit to 1.5°C climate plans

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Cop: EU says finance draft text not acceptable

24/11/21

Cop: EU says finance draft text not acceptable

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Mexico to keep some energy regulator independence

24/11/20

Mexico to keep some energy regulator independence

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