ISLAMABAD: Pakistan’s petrol consumption is estimated to surge by 80 per cent to 14 million tonnes by 2021-22. Overall oil demand is to increase by about 18pc despite an estimated 65pc fall in furnace oil needs in the said period.
These forecasts have been made by Oil Companies Advisory Council (OCAC) – an umbrella organisation of about two dozen oil marketing companies and refineries – in its “Pakistan Oil Report 2016-17” to be released shortly.
The report said the demand for motor gasoline, commonly known as petrol, currently stood at about 7.97m tonnes that would jump to 14.17m tonnes in 2021-22, showing an increase of about 78pc.
On the other hand, consumption of furnace oil has been estimated to reduce by almost 65pc to 3.2m tonnes in five years from current consumption of about 9m tonnes. In fact, furnace oil consumption would drop to 3.2m tonnes next year and then remain flat at that level for five years due to diversion of power generation to imported liquefied natural gas and coal. The fuel switch in power sector is estimated to provide about $2.5-3 billion per annum.
The demand for total POL products is estimated to increase from 27m tonnes this year to about 32m tonnes in five years, showing an increase of 17.5pc. High speed diesel (HSD) would be another major driver for growth in consumption of petroleum products.
The HSD consumption is estimated to increase by 46.4pc to 13.7m tonnes in five years from current level of 9.3m tonnes.
The demand for kerosene oil and light diesel oil is also estimated to increase by 8.24pc each to 141,000 tonnes and 25,000 tonnes respectively in five years.
Based on GDP Growth of 7pc, the forecasted annual demand of petroleum products will reach around 55m tonnes in 2030, from the 2018 estimated demand of 29.6m tonnes. “This includes estimated CPEC impact on HSD demand”, the report said.
The OCAC said the deficit of petrol currently stood at 4.8m tonnes owing to insufficient refining capacity in the country which would surge by 122pc by 2021-22. Likewise, HSD deficit would increase from 3.9m tonnes at present to 6.3m tonnes, showing an increase of more than 62pc.
The OCAC said meeting the challenge of sustained energy supplies was of critical importance to Pakistan’s growth. It said a road map for ensuring sustained supply of Petroleum Oil Liquids (POL) to the Pakistan market was necessary to help keep the wheels of the economy turning and ensure that projected growth targets were achieved.
The report said it was also important to provide better world scale quality products (minimum Euro IV/V) to the Pakistani consumer. “Additional Deep Conversion Refineries, De-bottlenecking of the existing Ports including Byco’s Sing Point Mooring, and the addition of another Oil Pier at Port Qasim besides cross-country pipelines geared to handle dual fuels, adding matching oil depots installations and storages are the ingredients for Pakistan’s future success”, the OCAC emphasised.
It said the year 2016-17 was very challenging for the downstream oil sector. Whilst crude prices remained stable and Pakistan also benefitted from the low oil prices in the international market, the phenomenal growth in demand for transport fuels, riding a wave of low prices at the forecourt, was a major challenge.
In 2016-17, the petroleum products consumption was around 26.76m tonnes, representing an increase of 9.64pc over 2015-16. Petrol and HSD were the main drivers with a growth rate of 15pc and 10pc, respectively, over 2015-16, leading to higher imports and pressure on the country’s two ports, namely the KPT Oil piers at Keamari and FOTCO at Port Qasim.
The report said thermal power generation quantum of PEPCO was 21,571 million units (MKWH) during 2016-17, up from 17,348 MKWH of electricity generated in the corresponding period last year, a robust increase of 24pc.
The fuel oil requirement of generation companies (Gencos) was expected to remain stagnant from 2017-18 to 2021-22 based upon Government of Pakistan’s initiative of converting its existing thermal-based power generation to cheaper fuels like LNG and coal.
It said KAPCO remained the only IPP using close to 1m tonnes light sulphur furnace oil (LSFO) as generation fuel. In terms of fuel consumption by IPPs, out of the total 4m tonnes high sulphur fuel oil (HSFO) consumed for power generation by IPPs. Of this, 47pc HSFO was consumed by Hubco alone, while other IPPs consumed the remaining 53pc.
With respect to usage of HSD for power generation, KAPCO utilised 22pc of the total HSD consumed in power generation during 2016-17, while other IPPs consumed the remaining 78pc HSD used in power generation.
Published in Dawn, April 11th, 2018