KARACHI - Despite sharp increase in local oil product prices, oil sales volume continued with the upward momentum and reached 1.6mn tons during July 2008, up by 3 per cent YoY, 8 per cent MoM. Though, sales of furnace oil (FO) showed a downward trend, sales of diesel (HSD) remained robust at 742k tons, up by 15 per cent YoY. Shell, with 27 per cent rise in volumetric growth, was a star performer during July 2008. Out of total volumetric sales of 1.6mn tons (excluding non-energy products), sales of regulated products including HSD, petrol (Mogas), kerosene (SKO) & light diesel (LDO) were recorded at 884k tons in Jul 2008, up 11 per cent YoY. On the other hand, combined sales of FO and Jet fuels (non-regulated products) were recorded at 738k tons, down 5 per cent YoY. Since OMCs Rupee margins on regulated products have been capped, therefore only volumes will play a key role in driving the earnings of OMCs in the regulated product segment. In July 2008, it was observed that regulated products sales for PSO, Shell and APL stood at 552k tons up by 17 per cent, 195k tons up 11 per cent & 37k tons up 53 per cent, respectively. While, only Shell recoded an increase of 190 per cent in non-regulated product sales during July 2008. Contrary to expectations, diesel sales growth remained robust during the month of July 2008, up 15 per cent YoY. Similarly, on MoM, diesel sales were also up by 11pc. Hence, volume growth continues despite the fact that local consumers faced a sharp increase in diesel prices by Rs14.51/liter (Rs5/liter increase on Jun 29 and Rs9.5/liter on Jul 21). It is being believed the growth is due to higher intake of local diesel by the retailers/dealers instead of smuggled Iranian diesel. With ongoing rationing in Iran (started in June 2007), penetration of smuggled diesel has been reduced which until last year FY07 effected local OMCs sales. Moreover, frequent electricity failures also triggered demand for diesel by household generators and small captive plants. In contrast to diesel and FO, petrol sales were down 3 per cent YoY (1 per cent MoM). Lower petrol off take was mainly due to sharp increase in petrol prices by Rs18/liter (Rs7/liter increase on June 29 & Rs11/liter on July 21). Since petrol has an ideal substitute CNG, thus demand of CNG was remained higher in July 2008. Shell outperformed the industry by a wide margin. Against 3 per cent growth in industry sales, Shell recorded a healthy 27 per cent gain in its volumetric sales. Accordingly, its market share has improved to 15 per cent from 12 per cent in Jul 2007, whereas, PSO maintained its market share of 69 per cent.