KARACHI, Jan 28: Pakistan's chances of re-entering the export business of fuel oil after over 20 years have hit snags following the cancellation of tender by Pakistan Refinery Limited (PRL). The refinery had issued a tender on January 14 for the export of 40,000 tons fuel oil.

"PRL has to cancel the tender as the local demand from the power sector picked up again," Manager Commercial and Supply of PRL, Aftab Husain told Dawn on Wednesday. The quantity was estimated to be available during the end of January to first week of February and the last date of bid was January 23.

"We have to first meet the local demand and then look after the export business," he said, adding "chances are bleak to re-issue the export tender till end of February."

"In case the product becomes surplus - refineries will again review the situation and issue fresh export tender," Mr Husain said. Among the bidders who participated through their local agents were: Vetol, Glencore, British Petroleum, Trafigura, Hascomb, IPG, Petro Plus, etc. It could not be known what price they offered for the deferred tender.

"We have informed these bidders about the cancellation of tender," the PRL official said. He said much depended on the demand and supply position of the local market and then the refineries will evaluate the overall situation. The refineries have depleted their stocks to meet the additional demand of furnace oil placed on them.

Pakistan was expecting to earn $6 to 7 million from the first lot of 40,000 tons export cargo in which PRL enjoys the lion's share, while National Refinery Limited (NRL) holds the rest.

According to market analysts, fuel oil had remained surplus since its main buyers - Wapda and other fuel oil dependent sources - had switched over to natural gas. Pakistan had also not imported any fuel oil consignment during the last six months.

Import of fuel oil touched a high of 5.7 million tons (costing $826 million) in 1999-2000, and the last year (2002-03) it was around 4.1 million tons ($708 million).

The analysts had also projected that Pakistan was unlikely to import any more furnace oil in the year 2004 owing to shift from fuel oil to gas by Wapda, KESC and other plants.