July 04, 2022 (MLN): Pakistan’s oil marketing companies (OMCs)’ sales stood at 22.6 million tons (MTs) in the outgoing FY22, showing an increase of 16% YoY, which was much better than the last 10-year growth rate.
This was mainly led by higher-than-expected growth in Furnace Oil (FO) sales which reached 4 MTs- the highest since FY18 due to high demand in power plants amidst non-availability of RLNG along with low hydel generation, a report by Topline Securities said.
Excluding FO, oil sales were up 13% YoY in FY22 due to an uptick in Motor Gasoline (MOGAS) and High-Speed Diesel (HSD) sales.
During FY22, MOGAS and HSD volumes witnessed a jump of 9% YoY and 15% YoY to 8.9 MTs each, driven by strong economic growth including growth in the Agriculture sector, and an increase in auto sales.
In the month of June 2022, the volumetric sales were down by 11% MoM to 1.9 MTs in June 2022 due to a decline in MOGAS and HSD sales. This is majorly due to the sharp rise in MOGAS and HSD prices by 31% & 51% in June 2022, respectively after the incumbent government removed the fuel subsidies, passing on the full cost of supply impacts to domestic consumers.
While on yearly basis, oil sales remained flat in June 2022. Product-wise, MS and HSD volumes dipped by 10% and 8%, YoY settling at 70k and 71k tons in the said month under review. However, Furnace Oil (FO) sales volumes ascended by 33% YoY to 453,000 tons on account of higher demand from IPPs in June 2022. The continuous failure of procuring LNG on a spot basis forced the government to run power plants on FO.
The LNG spot price has reached an all-time high level of 40 dollars/mmbtu.
Company-wise analysis showed that Pakistan State Oil (PSO) led the chart as its sales grew by 29% to clock in at 11.62 MTs whereas Attock Petroleum (APL) and Shell Pakistan (SHEL) sales improved by 22% and 14% in FY22. Hascol Petroleum (HASCOL) underperformed the market during FY22.
The report expects oil sales to decline by around 15% YoY in FY23F tons due to an expected decline in auto sales in FY23, low growth estimated in the agriculture sector (2.5% for FY23F vs. 4.4% in FY22), along with a sharp increase in petrol/diesel prices.
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