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Business & Finance

Pakistan's demand for cleaner fuels to support Chinese markets

  • Domestic supply tightness, coupled with aging refineries that are unable to produce high grade fuel will push Pakistan to rely a lot more on imports, said the report.
05 Aug 2020

Pakistan's demand for cleaner motor fuels by 2021 will likely support the Asian gasoline and gas oil markets in the medium term said S&P Global.

The report highlighted that in June the government of Pakistan imposed a ban on gasoline imports of less than Euro 5 standard from August onwards. Before the decision, motor fuel imports were of Euro 2 standard, but with the switch to Euro 5, the demand would rise with additional imports set to fill supply gaps as domestic production remains limited.

Domestic supply tightness, coupled with aging refineries that are unable to produce high grade fuel will push Pakistan to rely a lot more on imports, said the report.

From July 2019 to May 2020, Pakistan's production of gasoline and gasoil accounted for only 26.58% and 59.4% of domestic consumption respectively, according to data from Pakistan Oil Companies Advisory Council.

The reliance on imports, would be a boon for the Chinese gasoline exports, which have been hit by shutdown in local construction activities. However, this new Pakistan demand will help to draw some cargoes away from Asia, said the report.

China is expected to export 1.3 million-1.5 million mt of gasoline in August, with gasoil exports possibly hitting 1.9 million mt, added the report.