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ISLAMABAD: Directorate General of Oil (Petroleum Division) has requested Oil and Gas Regulatory Authority (Ogra) to examine demand and supply of furnace oil by power sector (including KE) and general industry and direct Pak-Arab Refinery Limited (PARCO) to export surplus volume without compromising the overall refinery throughput to ensure maximum local supplies of HSD and Mogas.

The National Power Control Centre (NPPC) has determined the accumulated fuel requirement of 315,730 MTs for power sector for three months, i.e. November and December 2022 and January 2023, subject to supply of 165 MMCFD of RLNG each month, official sources told Business Recorder.

In November 2022, RFO demand for Altas power plant, Liberty Tech, Nishat Chunian, Nishat Power, Lalpir, Saba and Pakgen was zero whereas demand for Hubco Narowal was 4,944 MTs, Attock Gen 17,748 MTs, and KEL 12,080.

In December 2022 and January 2023 RFO requirement for Atlas would be 18,902 MTs and 20,088 MTS, Liberty Tech 17126 MTs and 15,289 MTs, Nishat Chunian 13,168 MTs and 7,531 MTs, Nishat Power, 13,236 MTs and 10,333 MTs, Hubco Narowal 16,417 MTs and 16,005 MTs, Lalpir, 3,889 MTs and 9,544 MTs, Saba Power, 10,150 MTs and 5,804 MTs, Attock Gen 21,971 MTs and 19,263 MTs, KEL 33,300 MTs and 13,884 MTs and Pakgen 33,300 MTs in December but zero in January 2023. This shows total requirement of HSFO (RFO) for November 2022 at 34,773 MTs, for December 163,215 MTs and 117,742 MTs in January 2023, according to General Manager, Sajjad Akhtar System Operator.

In a letter to Chairman Ogra, Director (L&M), Directorate General Oil, Iltaf Hussain Ansari has given reference of NTDT letter of November 21, 2022 which contains furnace oil requirements of power sector for December 2022, January and February 2023 excluding K-Electric demand.

Keeping in view the existing FO inventory with oil marketing companies and oil refineries, surplus finance oil volumes are expected in the said months, which will have to be exported in order to create necessary ullages to maintain refinery throughputs. In this regard, the PARCO in a letter of November 21, 2022 addressed to Oil Directorate with copy to Ogra has requested for furnace oil requirements and approval of a laycan for export of one cargo during end December 2022.

In this respect, a meeting with Power Division was held on November 18, 2022 wherein it was decided that Power Division would provide firm demand so that any surplus volumes by Karachi refineries/PARCO are timely exported to avoid ullage issues.

According to Directorate of Oil, for ARL for which export option was not viable, they were advised to explore options for either reducing FO prices to match the merit order or otherwise store their product in storages of IPPs /OMCs in order to improve ullage and throughput.

The Directorate General Oil has requested Ogra to examine the demand and supply of furnace oil by power sector (including KE/general trade & industry) from December 2022 to February 2023 and accordingly Karachi-based refineries/PARCO may be directed to make immediate necessary arrangements to export surplus volumes without compromising throughputs to ensure maximum local supplies of HSD and Mogas.

The System Operator has further apprised that Petroleum Division has intimated to NPCC (OCAC Daily Sales & Stock Position) that as of Oct 31, 2022, a total RFO stock of 403,714 MTs is available in the country, out of which 162,925 MTs of stock are with Oil Marketing Companies (OMCs), 71,897 MTs of stock are with refineries, 168,891 MTs with power sector and 92.521 MTs as dead stock.

The stock with refineries and OMCs is creating an ullage issue and may lead to operational issues at refineries therefore NPCC has suggested that necessary/ timely RFO stock be built at the IPPs. Any additional RLNG made available to the power sector will be utilized according to the prevailing Merit Order as and when allocated. However, variations in RLNG to power sector from the already committed supply will cause variations in the consumption of RFO as per economic merit order.

Copyright Business Recorder, 2022

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