LAHORE - The average gross margins of refineries have come down by about 20 percent to around $4.5-$5 per barrel from $6 per barrel so far in the second quarter of the fiscal year 2011, compared to the first quarter, it was learnt on Thursday. If the rising crude oil price of $85 per barrel is continued to stay the margin is expected to reduce further to $3.5-4 per barrel. Experts said that the decline in margins is primarily due to increase in negative margin on furnace oil from negative $3 per barrel to negative approximately $ 4 per barrel. According to experts, the average gross refinery margin is actually the spread between crude oil price and product price, which determines the profitability trend in any particular period after taking into account the product mix of local refineries. According to them, the latest August production numbers show that there is not much variation in production data of different quarters. They said that if refining cost is included, which usually remains almost constant throughout all quarters, the net refining margins so far in 2QFY11 would be around $2.5 per barrel. They were of the view that the current margin of $4.5-5 per barrel is still at par with average margins of $4-4.5 per barrel during last four quarters. However, if it is compared only with last quarter (July-Sep) the GRM is down by 15-20 percent from $6 per barrel to $4.5-5 per barrel. Though margins are expected to remain lower than last quarter, 2QFY11 earnings are expected to remain robust for few refineries specially ATRL, said Farhan Mehmood, an energy expert. He expected ATRLs fuel business to post earnings of Rs2-3 per share in 2QFY11 whereas contribution from non-refinery income could be some where around Rs9-10 per share. This translates into 1HFY11 earnings of around Rs18-19 per share, assuming crude prices to stay at these levels, he added. The non-refinery income includes the realization of final dividends from NRL and APL while the impact of Rs1.5-2 per share likely from Attock Gen dividend. Salman Abduhoo On the other hand, NRL will continue to benefit from higher margins lube business. The companys lube business on an average contributed Rs8-10 per share to the quarterly earnings in last 1 year.