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Pakistan State Oil (PSO) has purchased up to 780,000 tonnes of high sulphur fuel oil (HSFO) for delivery between March and April, according to market sources.

Pakistan's leading oil marketer bought a total of 10 HSFO lots of 65,000 tonnes, with the option to purchase an additional two cargoes of the same size.

The tender is reported to have been awarded to Saudi Arabian oil trader and bunker supply firm Bakri International Energy Co. Ltd. at premiums of $19-21 per tonne to Middle East spot quotes, on a cost and freight (C&F) basis to Karachi, reflecting a weaker fuel oil market compared to January.

Last month PSO purchased 585,000 tonnes of high-sulphur fuel oil for delivery during the first three months of 2010. The volume secured for the period was said to be relatively low despite the peak winter season due to high inventories.

The tender for nine 65,000-tonne parcels of 180- or 125-centistoke (cst) was said to have been secured by Middle East trading companies Bakri and FAL Oil - both regular PSO fuel oil suppliers - at a premium of $21.00-$24.00 per tonne to Middle East spot quotes, on a cost-and-freight (C&F) basis to Karachi.

PSO normally awards its tenders to Middle East traders due to the freight advantage they have over Singapore-based firms. The company imports on average around 600,000 tonnes of fuel oil per month.

Pakistan’s purchasing requirements are said to be reverting back to normal after experiencing lower demand from the country’s power plants towards end of last year. PSO imported around 300,000-500,000 tonnes in each of the last two months of 2009, due to high inventories.

Fuel oil import volumes are expected to increase in 2010 by around 5-10 per cent compared to last year due to additional power-generation capacity, according to market esimates.