Stocks of petrol have reached record-high levels that can meet 26 days of demand in Pakistan. The development comes when refineries have already warned of looming shutdown owing to the refusal of power plants to procure furnace oil.
As per officials, currently, the country has petrol stocks of 600,000 tons as demand has remained lower than forecasts.
Earlier, the oil industry had forecasted consumer demand for 800,000 tons of petrol in November, however, the consumption remained far lower than the estimate.
According to reports, high prices of petrol had hit the purchasing power of consumers, and smog during winter also resulted in low consumption of the fuel.
“Petrol stocks have reached 26 days of requirement for the first time in Pakistan’s history,” remarked an official.
As per reports, the current consumption of petrol is at 21,000 to 22,000 per day in the country.
However, if refineries go ahead with their plant closure plans, a gas crisis might erupt in the current winter season.
According to reports, a senior executive of a refinery shared that if the current situation continues, the refineries would start shutting down in the next three to four days, which may disturb oil and gas supplies from fields across the country.
Attock Refinery Limited Chief Executive Officer Adil Khattak, in a letter sent to the director-general oil, argued that there had been no improvement in supplies from the refinery.
He said, “Furnace oil inventory has increased manifold and storage capacity has been left hardly for 8 to 10 days”.
Khattak underlined that the refinery had been left with no choice but to curb production due to the lack of demand and they would be forced to close distillation units one by one, which would lead to the shutdown of the whole refinery.
He criticized those huge volumes of furnace oil that were being imported while the oil was not being purchased from domestic refineries. Independent power producers (IPPs) were not being pushed by regulatory authorities to procure furnace oil from the refineries.
He argued that the situation pointed towards lack of planning and coordination adding, “At a time when refineries are heading towards shutdown, we have been asked on November 30 to increase production of kerosene oil as the country is left with only 10 days of stocks”.
Pakistan Refinery Limited CEO Zahid Mir said in a letter that the refinery’s furnace oil production stood at 7,109 tons in November 2021 whereas the total procurement was 5,875 tons.
Furthermore, PRL has produced 3,244 tons in December 2021 but the demand is zero.
The letter read, “PRL’s current fuel oil stocks are 7,112 tons … given this situation and considering the current demand and production level, PRL can only operate for next 10 days if furnace oil procurement is not started”.
He requested the Petroleum Division to address the issue on an urgent basis and encourage the power sector to enhance the consumption of furnace oil to curtail the inventory at the refineries.
“PRL currently has fuel oil ullage for just 10 days and if procurement issues are not resolved, PRL will have no other option but to shut down.”
He highlighted that avoiding refinery shutdown was necessary for a sustainable and uninterrupted supply of petroleum products, especially JP-1 and JP-8 along with supplies of high-speed diesel and motor spirit to oil marketing companies.