Pakistan’s largest oil refiner, Cnergyico, plans to increase its fuel oil exports by 35% to 40% during the fiscal year ending June 2026. Cnergyico Pakistan to Boost Fuel Oil Exports comes in response to a significant decline in domestic sales, largely due to a substantial rise in fuel oil taxes. The company has already exported 80,000 metric tons of fuel oil since July, accounting for 95% of its production, compared to 55% during the same period last year.
Impact of Tax Increases on Domestic Sales
In June 2025, Pakistan imposed an additional 40% tax on fuel oil sales, adding to the existing 18% consumption tax. This increase in taxes has made domestic sales less viable, leading Cnergyico to shift its focus towards international markets. As a result, the company expects a significant rise in export volumes, with projections estimating annual exports to reach between 333,000 and 346,000 metric tons.
Strategic Adjustments and Refinery Upgrades
To adapt to the changing market conditions, Cnergyico is undertaking substantial upgrades to its refinery complex. The company plans to reduce fuel oil production and increase the output of cleaner fuels such as diesel and gasoline. This includes importing low-sulfur crude oil, particularly from the United States, to reduce the production of high-sulfur fuel oil. Cnergyico also plans to establish fuel oil cracking facilities to further enhance gasoline production, in line with Pakistan’s policy to produce cleaner fuels.
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Export Markets and Revenue Implications
Cnergyico’s fuel oil exports are primarily aimed at maritime fuel markets, with shipments directed to regions such as Southern Europe, Singapore, and the United Arab Emirates. Historically, fuel oil sales have contributed approximately 10% to 15% of the company’s annual revenue. However, the profitability of these exports is subject to market conditions, as revenue is influenced by fuel oil crack spreads, which can fluctuate depending on global demand and supply dynamics.
Future Outlook
By increasing fuel oil exports, Cnergyico aims to mitigate the challenges posed by the tax hikes on domestic sales. The company is focused on expanding its export portfolio and refining its production processes to sustain revenue and support Pakistan’s economic resilience. The success of these initiatives will depend on Cnergyico’s ability to navigate global market fluctuations and maintain operational efficiency in the years ahead.
