Govt announces to introduce new refinery policy

ISLAMABAD: Federal Minister for Energy Hammad Azhar on Sunday announced that a new refinery policy was being finalised “to shift refineries away from the production of furnace oil.”

In a series of tweets, the energy minister said the federal government was finalizing a new refinery policy in order to move refineries away from FO production.

Clarifying some misconceptions about availability and consumption of Furnace Oil, the minister said: “In summers Pakistan faced a moderate shortage of furnace oil as the FO (based) power plants ran more than last year (as per merit order) due to low water levels in dams.”

– 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

Hammad Azhar said the FO plants were running because of decreasing water flows from dams (due to canals’ closure), adding in a couple of days these would be consuming around 13,000 tonnes per day of FO.

“Local refineries produce is only half that volume and IPPs stocks levels are still below the required levels.”

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

The minister further said: “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.”