Pakistan steps up oil and gas imports as economic activities rebound, Energy News, ET EnergyWorld
Pakistan has increased its oil and gas imports this year from last year as demand from its power sector rises amid increasing economic activity as coronavirus-induced restrictions are lifted, industry circles said.
The country is a major importer of liquefied natural gas (LNG) and heating oil for power generation. Any significant increase in imports usually drives up the prices of these fuels.
So far, the South Asian country has imported at least 785,000 tons of heating oil through tenders from 2021 to September, 52% more than in the entire previous year, according to data from tender documents and dealers.
Total imports of oil and refined fuels rose 24% to around 10 million tons in the fiscal year ended June, according to data from the Pakistani Ministry of Petroleum.
Total LNG imports rose 23% to around 5.3 million tons in August this year, compared to the same period last year, according to Refinitiv Eikon’s ship tracking data.
“Many plants are kicking production while economic activity is returning to normal, which has been the main driver in the energy sector,” a Pakistani source told Reuters, declining to be named as he was not allowed to talk to the media speak .
The country, which borders India, Afghanistan and Iran, beat growth forecasts in fiscal year 2020-21 despite a third wave of COVID-19 infections, hitting 3.96% GDP growth after rising by 0 in 2019-20 , 47% had shrunk.
“Although LNG prices are higher, Pakistan will have to import it due to uncertainty in (local) production and demand from the fertilizer sector,” the source said.
The Asian spot LNG prices are currently at their highest level since January and also at their highest for this time of year since at least 2010.
Prices for 180 cst high sulfur heating oil are currently at a two-year high, up 44% since January, but remain well below LNG prices in terms of energy content, making them more attractive for imports, traders said.
Still, switching from heating oil to gas in power plants isn’t easy, a second Pakistani source said, adding that gas will be needed to supplement oil consumption when demand increases.
“Oil-fired power plants can be started in a short amount of time and are typically deployed in the summer when LNG power generation is still insufficient,” the source said, adding that demand for heating oil could decline from October if the demand for electricity declines since the demand for heating oil is falling and the weather is getting colder.
The country also added about 250,000 tons of storage for oil products this year, mostly gasoline and gas oil, and rebuilt some existing tanks, which has also increased fuel demand, the first source said.
“But high steel prices put construction projects under pressure, which in turn could depress oil demand,” added the source.