Hammad announces introducing new refinery policy to separate FO from refineries

Federal Minister for Energy Hamad Azhar Sunday announced to introduce a new refinery policy for separating the furnace oil from refiners.

According to the 24News HD TV channel, Hamad Azhar in his fresh tweets said 6,000 tons of furnace oil is being extracted daily from refineries.

Thread on Refineries & Furnace oil; It is important to clarify some misconceptions.
-In summers Pakistan faced a moderate shortage of Furnace oil as FO power plants ran more than last year (as per merit order) due to low water levels in dams. FO consumption was 116% higher. 1/4

— Hammad Azhar (@Hammad_Azhar) December 26, 2021

He said daily consumption of furnace oil will reach 13,000 in a few days as some refineries have started providing extra furnace oil to the IPPs.

- For winters, 200k tonnes has been imported due to:

a) higher demand projection
b) risks of further LNG cargoes default
c) low stock levels at IPPs

Fortunately no further defaults of LNG cargoes took place in nov-dec period therefore FO plants did not need to run. 2/4

— Hammad Azhar (@Hammad_Azhar) December 26, 2021

The minister said the IPPs still have less than the required level of furnace oil.

Hammad Azhar said there was a shortage of furnace oil in the summer due to the low discharge of water in the dams.

Now the FO plants are running because of lowering flows from dams (canals closure) and in a couple of days will be consuming 13,000 tonnes/day of FO. Local refineries produce only half that volume and IPPs stocks levels are still below the required levels. 3/4

— Hammad Azhar (@Hammad_Azhar) December 26, 2021

The energy minister said Furnace oil used 116 per cent more in summer power generation than last year and resultantly, this year, 200,000 tons of furnace oil was imported for winter.

Therefore the country is well stocked on FO in case of further LNG defaults. The surplus at some refineries is going to IPPs as FO consumption is already above 6000 tonnes/day. Meanwhile a new refinery policy is being finalised to shift refineries away from production of FO. 4/4

— Hammad Azhar (@Hammad_Azhar) December 26, 2021

One of the reasons for the import of furnace oil was the possible default of LNG cargo, he said adding that fortunately, no more LNG cargo defaulted between November and December.

Storages of 2 refineries are full because FO power plants ran very little due to better than expected LNG deliveries (80% retainage) in Nov-Dec. Had it not been so you would have been tweeting about bad LNG delivery cargos and thus the need to run expensive FO plants. 1/2 https://t.co/rd6myLXaO9

— Hammad Azhar (@Hammad_Azhar) December 26, 2021

Reporter: Awais Kiyani