OMCs sales dip by 22% YoY in August

September 02, 2022 (MLN): Pakistan’s oil marketing companies (OMCs)’ sales declined in August 2022 by 22% YoY to 1.52 million tons (MTs), compared to 1.96 MTs in August 2021.

This was mainly led by lower High-Speed Diesel (HSD), Motor Spirit (MS), and Furnace Oil (FO) sales which declined by 26% YoY, 13% YoY, and 35% YoY, respectively.  

However, on a sequential basis, oil sales increased by 6% MoM in August 2022, from 1.44 MTs in July 2022. Product-wise, MS, and HSD volumes inched up by 7% MoM, and 12% MoM, respectively from 0.59 MTs, and 0.44 MTs in the previous month.

Cumulatively, the sales by OMCs saw a decline of 24% YoY to clock in at 2.97MTs in 2MFY23, compared to 3.9MTs in 2MFY22. During this period, the sales of MS, HSD, FO witnessed a fall of 20% YoY, 32% YoY, and 22% YoY compared to the same period last year.

On the other hand, the sale of FO dropped by 7% MoM to 0.33MTs in August 2022, compared to 0.35MTs in July 2022.

Company-wise analysis showed that Pakistan State Oil (PSO) witnessed a 23% YoY decline while on monthly basis, its sales inched up by 4% MoM to 0.79MTs in August 2022.

Similarly, Attock Petroleum (APL) reported a 23% YoY drop in sales whereas, on monthly basis, the company registered an increase of 8% MoM to 0.15MTs.

The sales recorded by Shell Pakistan (SHEL) worsened by 19% YoY whereas it increased by 10% MoM in August 2022 to stand at 0.11MTs.

In 2MFY22, the total sales by PSO, APL, and SHEL stood at 1.55MTs, 0.30MTs, and 0.21MTs, showing a plunge of 24% YoY, 18% YoY, and 25% YoY, respectively. 

OMC sales will likely be impacted by the catastrophic floods as overall economic activity in the affected regions is to be hit. More specifically, HSD offtakes may suffer the said ramifications on the back of overall agri destruction in Sindh/ Punjab, as farmer incomes are expected to suffer during the next few months, Muhammad Ali, Analyst at AKD Securities said.

Meanwhile, the increased water levels in dams due to heavy rainfall during the presently ongoing monsoon season may result in lower-than-expected FO demand, as hydel generation may reemerge due to increased availability, he added.

Furthermore, increasing fuel prices continue to haunt the sustainability of the sector as only the third month of rising prices resulted in a fall of 16%YoY during the three months.

“We flag this as a major risk, although recent positives such as downward turnover tax revision and alleged deregulation/increase of OMC margins may be a breath of fresh air for the players,” he noted.

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