Lahore

Despite significant cut in prices, oil products sales in the country remained flat during Feb 2016 at 1.8 million tons on annual basis while it was down by 6 percent on monthly basis. On the other hand, Furnace oil sale was down by 4 percent to 5.6 million due to availability of LNG to major plants, experts opined.  

The latest data of oil marketing companies indicates that the sales of different oil varieties in Pakistan grew by 5 percent to 14.8 million tons in first eight months of fiscal year of 2015-16 driven by strong growth in white oil, including motor gasoline (MOGAS) and High Speed Diesel (HSD). Due to declining oil prices, white oil sales reported strong growth during the period under review. In 8MFY16, MOGAS and HSD sales were up 24 percent and 3 percent to 3.6 million tons and 4.8 million tons, respectively.

The Oil sales are anticipated to remain strong in the remainder of the year despite flat sales during Feb 2016. Govt. has announced a further cut in HSD and MOGAS prices by 6-12 percent in Mar 2016, which will further push white oil sales in the country. We anticipate oil sales to grow by 5 percent to 23.2 million tons in FY16 vs. 4 percent growth during the previous year.  

As per company wise data, sales of Hascol Petroleum (HASCOL) continued to post strong growth increasing by 22 percent YoY to 0.95 million ton in 8MFY16 taking its market share to 6.5 percent vs. 5.6 percent in the same period last year. Shell also outperformed industry growing by 6 percent to 1.5 million tons. PSO’s oil sales grew by 3 percent to 8.1 million as company’s market share declined to 55 percent from 55.8 percent in the same period last year.

Energy experts, in a report released by the Topline, expressed liking for the OMC sector due to increasing demand of retail products amid lower oil prices, improving economic activity and increasing car sales. Any increase in OMC margins could act as a further price catalyst for the sector as it could impact industry profitability by 3-5 percent (assuming a 5 percent increase in margins). As per news reports, Ministry of Petroleum has sent a proposal to Economic Coordination Committee (ECC) to increase OMC margin on MOGAS and HSD as part of annual margin strategy devised in 2014. MOGAS and HSD constitute around 57 percent of the total OMC sales.