Pakistan set to resume oil product imports in May as lockdown measures ease: traders

Pakistan is expected to resume oil product imports in May after a month-long absence, providing a glimmer of hope to a bearish Asian gasoline complex, industry sources with knowledge of the matter told S&P Global Platts this week.

The resumption of imports comes as domestic demand in Pakistan, a net importer of transportation fuels, is expected to pick up after nationwide COVID-19 lockdown measures were eased from April 25.

Under the less stringent “smart lockdown” in place until May 9, some commercial and industry activity will resume under strict guidelines as the country gradually restarts economic activity, according to media reports.

“The mood is starting to be better – economic activity means more driving,” one source in Pakistan said Monday.

Pakistan’s motor gasoline consumption fell 15% year on year to 550,000 mt in March, while diesel consumption fell 32% to 397,000 mt, according to data from the Oil Companies Advisory Committee, a trade body of fuel retailers.

PSO typically purchases 5-6 MR cargoes a month via spot tender, before winding down to three in March and withdrawing all its tenders in April, according to open tenders seen by Platts.

The recent easing of the lockdown restrictions means state-run Pakistan State Oil is now able to take delivery of the three MR-sized gasoline cargoes it bought in March. The cargoes, originally slated for discharge in April, had to be deferred to May as the earlier restrictions included a ban on imports, one source with direct knowledge of the matter said.

PSO has withheld purchasing additional clips since March with “the [three] cargoes deemed enough for demand in May,” the source said.

Another source said the company was likely to resume normal purchase volumes from June deliveries.

PSO is already seeking an unspecified volume of 92 RON gasoline for June 1-15 delivery to Karachi in a tender that closes April 29 with validity until May 6, according to open tenders seen by Platts.

Wheat harvesting season is also expected to spur some upside for demand, traders said.

“High consumption of motor gasoline and high speed diesel have been witnessed since April 1, which is due to the progressing harvesting season across the country,” Pakistan’s energy ministry said in a letter to oil marketing companies and refiners on April 25.
UPSIDE MINOR FOR GASOLINE

Pakistan’s resumption of imports has raised the spirits of some in the Asian gasoline market, who have seen their usual outlets steadily dry up amid multiple nationwide lockdowns.

Vietnam, which imports around 20% of its domestic gasoline needs, has pared back spot buying due to high refinery run rates and ample stocks, while Mexico, another major buyer of Asian gasoline, has curtailed gasoline imports in April due to oversupply, sources said.

Indonesia’s state-run Pertamina, Southeast Asia’s largest buyer of gasoline, was also reported to have lowered its gasoline imports for May to around 9.3 million barrels from 10 million-11 million planned for April.

“At least someone is buying gasoline,” one Singapore-based source said.

However, the impact of Pakistan resuming gasoline imports, while positive, is likely to provide only minor upside to the bearish gasoline complex, market sources said.

“The oversupply is still here to stay for some time, Pakistan will give some support, but I doubt it’s enough,” another Singapore trader said.

The FOB Singapore 92 RON gasoline crack against front-month ICE Brent crude futures has remained in the red for the past seven weeks and assessed at minus $1.74/b at the Asian close Tuesday, Platts data showed.
Source: Platts