Pakistan State Oil Review

Oil Sales Up 12%YoY in 1QFY14 

The government’s efforts to overcome power outage and gas curtailment to the transportation sector are boding well for petroleum product sales in Pakistan. During 1QFY14, Pakistan Oil Field Limited (POL) product sales rose by 12% YoY to 5.5mn tons vs. 4.9mn tons sold in the same period last year. Amongst individual products, Gasoline (commonly known as petrol) sales rose by 22% while Furnace Oil (FO) sales increased by 12%. Higher sales are likely to reflect positively on the OMC sector’s profitability for 1QFY14 dually aided by higher product margins and inventory gains. However, FOREX losses caused by the abrupt PKR weakness are likely to be the major concerns for the 1Q. In the broader scheme of things, the fate of the sector hinges onto the development on the hike in electricity tariff in the apex court, and any adverse decision could potentially unroll the liquidity trap, particularly for Pakistan State Oil Limited (PSO), one again.

Capitalizing On Liquidity Injection and Gas Curtailment

The sector has sold 5.5mn tons (up 12%YoY) of petroleum products in 1QFY14 on the back of the 12% and 22% increase in Furnace Oil (FO) sales while petrol sales are benefiting from the gas curtailment to the CNG sector. To highlight, the share of petrol in oil sales has increased from 8% in FY09 to more than 17% in recent times. Gasoil (popularly known as HSD) sales rose by 7%YoY to 1.7mn tons.

In Sep’13, oil sales stood at 1.7mn tones, up 29%YoY but down 5%MoM. Higher YoY growth comes from higher petrol and HSD sales compared to the same month last year.

Pakistan State Oil Limited (PSO) Continue To Be The Market Leader

Pakistan State Oil Limited (PSO) continues to be the dominant player in the market, but the company saw its market share shrink by 5% to 63% in 1QFY14. The company sales rose by 4$, while sales of other listed OMCs –Shell Pakistan Limited (Shell) and Attock Petroleum Limited (APL) rose by 22% and 27% respectively. Their market share expanded by 1% each, to 10% and 9%, respectively. BYCO (a comparatively smaller player in the market) witnessed a sales growth of 33% with the company being able to sell a higher quantity of HSD and petrol; however, its market share remained muted at around 2%.