Analysis: Pakistan refineries production 2MFY11-12
By Riffat Mughal
Pakistan refinery sector production fell by 18 percent 2MFY11-12
KARACHI: Pakistan refinery sector production fell by 18 percent as it
stood at 1.2 million tons in first two months of fiscal year 2011-12
(2MFY11-12) as compared to 1.4 million tons in the corresponding period
last year.
However, in the month of August, Pakistan's refinery production slashed by 28 percent month on month (MoM).
Product wise production 2MFY11-12
Furnace Oil (FO) is the major product that Pakistan refineries
produce; contributing 31 percent in total refining production which
declined by 20 percent YoY. Other refinery products whose production
declined were Jet fuel (28 percent), Mogas (16 percent) and High Speed
Diesel (13 percent) YoY.
Pakistan bought less power-generation fuel oil for August, a
four-month low of less than 600,000 tons, as higher hydropower
generation cut demand for the utility fuel, Oil Companies Advisory
Committee (OCAC) data revealed.
This was one of the main reasons for the decline in production while
circular debt issue faced by refineries in Pakistan hinder the
production further as they did not have enough money to buy more fuel.
Another reason for decline in fuel oil production was lower demand by
the power generation companies mainly because of heavy rains in the
region which filled the dams and hydro power electricity plants were
used for power generation which reduced consumption of fuel in the
country.
Import volumes have fallen since, dropping by 10 percent for July to
757,660 tons also added up to the overall decline, data from OCAC
showed.
NRL market share surged to 24 percent 2MFY11-12
National Refinery Ltd (NRL) market share surged to 24 percent in
2MFY11-12 mainly because of massive growth in the current year. Hence,
NRL monthly production declined by 15 percent (MoM) on back of low
production of FO and HSD.
Attock Refinery Ltd (ATRL) share also increased to 23 percent YoY
during the period under consideration while its production fell by 5
percent MoM. The reason behind fall in NRL and ATRL monthly production
was weak demand by power and agriculture sector.
Pakistan Refinery Limited (PRL) share declined to 20 percent YoY,
though its monthly production surged by 18 percent MoM to 128,000 tons
in the month of August, 2011. BYCO share went down to 3 percent YoY
during the period under review.
PARCO market share fell sharply to 29 percent 2MFY11-12
PARCO market share fell sharply to 29 percent in 2MFY11-12 and its
production nosedived sharply by 78 percent MoM to 60,000 tons in the
month of August, 2011.
The decline in production was witnessed mainly because of recent
floods in the country which lead to closure of Pakistan's largest
refinery PARCO operations. The floods devastated the transportation
network which influenced PARCO to cut down its supplies and its
production also declined by 42 percent year on year (YoY) to 338,000
tons during 2MFY11-12.
Future Outlook
Low production in the month of August, 2011 would likely result in
weak first quarter financial results of refineries in FY11-12. After
floods and heavy rains, refineries along with other industries would
face a dry patch where demand will be lower. Persistent circular debt
issue would further lead to under-utilization of refinery operations amid
lower demand due to liquidity constraints.
Pakistan's fuel oil imports are expected to pick up towards the end
of the year, to meet peak demand for heating during the winter season
and also due to rising oil prices and depreciating rupee.
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