SINGAPORE — Pakistan’s largest refiner Cnergyico expects to boost fuel oil exports by 35 percent to 40 percent during the fiscal year ending June 2026 as high taxes have cut into domestic sales, its vice chairman said.
Pakistan levied additional taxes of about 40 percent on domestic sales of fuel oil in June, on top of a consumption tax of 18 percent, effectively shutting its refiners out of the domestic market.
The company has exported 80,000 tons, or 95 percent of its production, from July to date, versus 55 percent in the last fiscal year that ended in June, Usama Qureshi told Reuters on the sidelines of the APPEC conference.
Sales of fuel oil, mainly used by ships, typically make up 10 percent to 15 percent of the refiner’s annual revenue.
Cnergyico exported 247,000 metric tons (1.57 million barrels) in the fiscal year ended June, and an increase of 35 percent to 40 percent would boost annual exports to 333,000 tons to 346,000 tons.
Pakistan’s fuel oil exports jumped to an all-time high of 242,000 tons in August, data from analytics firm Kpler showed.
Cnergyico is upgrading its refinery complex to reduce fuel oil production and boost fuel sales to the domestic market, in line with Pakistan’s policy guidelines to upgrade refineries to produce cleaner fuels, Qureshi said in an interview.
“We will be importing more sweet crude and upgrading the refinery to produce cleaner diesel and gasoline, and also plan to set up fuel oil cracking facilities to boost gasoline production,” Qureshi added.
Cnergyico mainly imports so-called sour crude, with high sulphur content, from the Middle East, and booked Pakistan’s first-ever purchase of US crude last month.
US crude grades typically contain low levels of sulphur, and produce less fuel oil when refined.
Domestic sales of fuel oil are typically more profitable, while export revenue depends on fuel oil cracks, Qureshi said.
The company sold fuel oil to traders who exported it to destinations such as southern Europe, Singapore and the United Arab Emirates.
Pakistan has a significant fuel oil-based power generation capacity, but utilisation has plunged this decade, due to lower power demand, higher solar adoption and increased generation from other clean energy sources such as nuclear.
