KARACHI: Having been unable to attract local buyers even months after encountering a stock crisis, Pakistan Refinery Limited (PRL) decided to start exporting its huge stocks of heating oil (FO) during from the first week of February, if there is no improvement in demand, The News learned on Monday.

PRL has started moving the 24,000 metric ton FO stock to the storage the company has acquired on lease in the Port Qasim area of ​​Karachi. The company currently holds a stockpile of 24,000 metric tons of FO at its refinery and is making vigorous efforts to sell it locally and is ready to export it if it is not consumed by domestic independent power plants (IPPs).

PRL is the second refinery to store FO near Port Qasim for export after PARCO which has already stored 58,000 metric tonnes there. “PRL only has two options; either close the refinery or export FO at a discount to stay operational,” sources told The News.

According to sources, PRL can export FO at Rs83,000 per metric ton in the international market and is looking for a potential buyer. Currently, the world price of FO is Rs 85,000 per metric ton.

Sources said offering FO at a discount would result in financial losses for the refinery; however, price was not an issue at this time, as the removal of FO was critical to the operation of the refinery. Sources in the refinery sector said the issue of FO use had not been resolved, with the government also saying in no uncertain terms that it could not do refineries a favour.

“If it is lifted by the IPPs then fine, otherwise there is nothing the government can do about it,” the sources said citing the government, which held a meeting with refinery management last week. Refineries have also offered to sell OF at a reduced price but the situation has not improved for them so far. The import parity price for FO is Rs 98,000 per metric ton, but refineries have offered to sell their FO at lower levels.

The ex-refinery price of FO from National Refinery Limited (NRL) is 79,000 rupees per metric ton, while the ex-refinery price from Byco, PARCO and PRL is 83,000 rupees per metric ton and the ex-refinery price of Attock Refinery Limited (ARL) – Refinery price is Rs 93,000 per metric ton. On ARL’s high ex-refinery price, sources point out that IPP is lifting its FO because it uses local crude oil.

Sources said that currently local refineries have a total inventory of 200,000 metric tons of FO and this has created problems in the operational capacity of the refineries.

Sources noted that local refineries now have two options, either shut down the refineries or export the FOs and because of this they are offering to sell them at lower prices than the local and international market.