What has happened to furnace oil lately is evident in OMCs recent monthly sales. Shutting down of furnace oil based plants last month, and hence lower furnace oil consumption by the power sector has led to a decrease in November’s petroleum sales. The numbers from OCAC show that November 2017 yielded sales of a little over 1.9 million tons for the OMC sector, which was around 7 percent down year-on-year.
Of the key products, the furnace oil brought the greatest harm with volumes down by 29 percent and 55 percent, year-on-year, and month-on-month, respectively. Similarly, furnace oil imports were down by 18 percent year-on-year, and 44 percent month-on-month.
Other key products like petrol and diesel sales were also not very vibrant due to seasonal weaknesses; November 2017 MS (petrol) sales were only up by 6 percent, while HSD was down by 2 percent, on a year-on-year basis. Imports depicted the same trend, with petrol increasing just by 4 percent, while diesel witnessing a decline of around 14 percent in imports, on a year-on-year basis.
In the 11MCY17 aggregates, furnace oil remained weak during 2017 with the highest growth brought by retail fuels.
And since furnace oil based power plants remained shut due to reduced seasonal demand for power in winters and additional production capacity, 5MFY18 FO sales were down by 8 percent, year-on-year.
Moving forward, the petroleum sales will continue to show the changing energy mix, highlighted by a move away from furnace oil to alternate fuels like RLNG, coal, hydel, nuclear and renewables. However, with some of the FO plants back online after the sudden shutdown started creating problems for the refineries and the OMCs, the furnace oil volumetric fall might not be as steep as November 2017. Especially, when more of it will be needed to compensate the seasonal hydel decline. Nonetheless, a gradual phase out looks inevitable.
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