By SKM
October 28, 2025
ISLAMABAD: Pakistan’s refining sector staged a powerful comeback in September 2025, with Pakistan-Arab Refinery Company (PARCO) emerging as the clear front-runner amid surging domestic fuel demand and tightening controls on Iranian diesel inflows.
Industry data shows refinery upliftment—excluding furnace oil—jumped 21.6 percent year-on-year, signaling a decisive rebound in economic and transport activity. The revival was powered by High-Speed Diesel (HSD), whose offtake surged 32.1 percent on the back of robust agricultural operations, heightened freight movement, and curtailed cross-border smuggling.
At the forefront of this recovery, PARCO achieved an extraordinary 98 percent capacity utilization, the highest ever recorded among local refineries. The company maintained strong momentum throughout the year, with utilization rates of 103 percent in June, 93 percent in April, and 84 percent in August, before peaking in September.
Buoyed by disciplined operations and yield optimization, PARCO’s diesel sales climbed 38.7 percent, while motor spirit (MS) rose 19.4 percent year-on-year, cementing its commanding 55 percent industry share.
Other refiners also rode the recovery wave, though to varying degrees. National Refinery Limited (NRL) reported an 11.3 percent rise in total sales to 108,000 tons, led by a 30.6 percent increase in diesel and a 75 percent jump in MS, reflecting a strategic pivot toward lighter, high-margin products. Its furnace oil output, however, was virtually phased out—down 99.5 percent year-on-year.
Attock Refinery Limited (ATRL) faced operational bottlenecks due to constrained crude supply on the SNGPL gas network, leading to a 26.4 percent drop in total sales. Despite declines in motor spirit and furnace oil, diesel sales rose 18.4 percent, providing partial relief. Pakistan Refinery Limited (PRL) posted a modest 10.2 percent decline, while Cnergyico (formerly Byco) saw the sharpest fall—35.3 percent year-on-year—amid the lowest utilization rate in the industry at just 13.5 percent.
Overall, refinery production reached 866,000 tons in September, up 1 percent from a year earlier. Diesel output rose 7.1 percent to 432,000 tons, while motor spirit fell 3.3 percent and furnace oil declined 8.1 percent. The industry’s average utilization improved to 50.7 percent, up from 43.5 percent in August, reflecting a meaningful rebound in activity.
However, the resurgence bypassed furnace oil entirely. Once the backbone of Pakistan’s power generation mix, its demand plummeted 57.3 percent year-on-year to just 99,000 tons after the government imposed hefty levies—PKR 77 per litre Petroleum Development Levy and PKR 2.5 per litre carbon tax—in July. These measures inflated furnace oil prices by nearly PKR 85,000 per ton, pushing generation costs to around PKR 54 per kilowatt-hour and rendering its use economically untenable.
Analysts say the September data underscores the refining sector’s structural transformation. Refineries focusing on diesel and gasoline production are thriving, while those tied to heavier, low-margin products are struggling to stay competitive.
Despite persistent headwinds—including volatile crude prices and evolving energy policies—Pakistan’s downstream oil industry is showing resilience and adaptability. For now, the message is clear: those that evolve are not merely surviving the transition—they are powering through it.
