Pakistan’s fuel oil imports for May more than doubled from April’s three-year low volumes to around 700,000 tonnes, while tender requirements indicated the country would seek large volumes till October, official data showed.
Imports of high-sulphur fuel oil (HSFO), mainly for power generation, were at the highest level since October 2010 at about 600,000 tonnes, while imports of low-sulphur fuel oil (LSFO) were at about 116,000 tonnes, figures from the country’s Oil Companies Advisory Committee showed on Tuesday.
Middle East-based sources said the low April volumes were not reflective of Pakistan’s growing demand for fuel oil, which is expected to rise this year, and were due to operational issues.
“The May import volumes are reflective of demand in the country, one of the few places in the world where fuel oil usage for power generation is still growing,” a Pakistan-based source said.
With the May imports, the monthly average volume for the year amounts to about 558,000 tonnes, little changed from last year’s average of 550,000 tonnes.
The country is also seeking large volumes for the August-October period, having issued a tender to purchase up to 1.66 million tonnes via Pakistan State Oil (PSO).
It is seeking 20 HSFO cargoes of 65,000 tonnes each and six LSFO lots of 60,000 tonnes each for August to October delivery, both on a cost-and-freight (C&F) Karachi basis, via a tender that closes on June 28 and remains valid till July 2.
The requirement, which averages 550,000 tonnes for each of the three months, follows heavy purchases for June-October delivery totalling 1.62 million tonnes, or about 340,000 tonnes per month.
Pakistan is one of few growth areas for the fuel oil market in the world, because most of its electricity is still generated by oil-fired plants, while other countries increasingly are turning away from the product due to environmental reasons.
Most of Pakistan’s supplies come from the Middle East due to freight advantages because of the proximity to the country, versus East Asian players.
Traders expect the current tender to be concluded at higher prices, given the bullish fuel oil market in which timespreads and cash differentials have reached multiple milestones over the past week.
International players such as European traders Vitol and Trafigura have muscled into the Pakistan market in the past year, traditionally a stronghold of Middle East players such as Bakri and FAL Oil, after they set up shop in the United Arab Emirates port of Fujairah.
Their presence got a boost from Pakistan’s increased requirement for fuel oil of less than 1 percent sulphur, particularly since 2009, when it had to reactivate older power plants to meet increasing demand for electricity.
OMG…….
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