pakistan’s Fuel Oil Exports Surge as Domestic Demand Declines

pakistan is experiencing a important increase in fuel oil exports, driven by a shift towards lighter, sweeter crude oil and declining domestic demand for fuel oil in power generation. A partnership with global trading house Vitol is further bolstering the country’s capacity to supply low-sulphur marine fuel.

Shift to Low-Sulphur Fuels and Increased Exports

A company operating in Pakistan anticipates at least 50% growth in its fiscal year, fueled by the increased processing of light-sweet crude oil. this has led to a higher output of very low sulphur fuel oil (VLSFO),a key component in meeting international marine fuel standards. The International Maritime Association (IMO) implemented stricter regulations on sulphur content in marine fuels in 2020, driving demand for VLSFO.

To capitalize on this trend, the company has collaborated with Vitol to enhance the supply of low-sulphur marine fuel from Pakistani ports. This partnership aims to streamline logistics and expand market reach.

Decline of Fuel Oil in Pakistan’s Power Sector

Syed Nazir Abbas Zaidi, Secretary General of Pakistan’s oil companies advisory council, predicts a continued rise in furnace oil exports. “The trend in furnace oil exports is only going to increase going forward,” Zaidi stated. He attributes this to the decreasing viability of fuel oil for electricity generation and its reduced profitability in the domestic market, particularly following budgetary changes.

Pakistan has been actively diversifying its energy mix, moving away from oil-fired power plants towards renewable energy sources like solar and wind, and increased reliance on natural gas. The International energy Agency (IEA) details Pakistan’s energy profile, highlighting this shift and the country’s efforts to improve energy security.

Why is Fuel Oil No Longer Viable for Electricity Generation?

Several factors contribute to the declining use of fuel oil in power generation:

• Cost: Fuel oil is generally more expensive than other fuel sources like natural gas and coal.
• Environmental Concerns: Burning fuel oil produces higher levels of pollutants compared to cleaner energy sources.
• Government Policies: Recent budgetary measures and energy policies have disincentivized the use of fuel oil in power plants.
• Shift to Renewables: Pakistan is actively investing in renewable energy projects,reducing the need for traditional fossil fuels.

Key Takeaways

• Pakistan’s fuel oil exports are increasing due to a shift to low-sulphur fuels and declining domestic demand.
• A partnership with Vitol is strengthening Pakistan’s position as a supplier of low-sulphur marine fuel.
• Fuel oil is becoming less competitive for power generation due to cost, environmental concerns, and government policies.
• Pakistan is diversifying its energy mix, prioritizing renewable energy sources.

Looking ahead, Pakistan is expected to continue increasing its fuel oil exports as it transitions towards a more sustainable and diversified energy landscape. The country’s strategic location and growing refining capacity position it to become a key player in the regional low-sulphur fuel market.

Published in Dawn,November 28th,2025