The oil consumption in the country posted a decent growth of 10.26 percent to 15.5 million tons in the 10 months of fiscal year 2008 (10MFY08) as compared to 14.07 million tons consumed in the corresponding period in FY07. According to data released by OCAC, the local refineries provided 844,000 tons in the period under review while remaining 51 percent of the consumption was met through imports.
Two major White Oil products, HSD and Mogas, were the drivers fuelling growth path posting 14 percent and 30 percent on year-on-year basis, respectively. The combined volume of the two (HSD and Mogas) was 7.06 million tons in 10MFY08 (51 percent of the total volumes) over 6.79 million tons in 10MFY07.
"This was due to refuelling demand amid reduced smuggling of the Iranian product (Mogas) and increased utilisation of (HSD) in transportation and power generators due to acute electricity shortage," Khurram Schehzad, senior analyst at Invest Capital and Securities said. Other than HSD and Mogas, White Oil products - HOBC, JP-8, JP-1 and Kero - witnessed volume growth of only 1.9 percent on year-on-year with 1.10 million tons.
Black Oil (FO and LDO), on the other hand, posted growth of 5 percent with 6.50 million tons in 10MFY08 against 6.18 million tons last year. However, in volumetric terms, Black Oil added 23 percent to the total volume increase in 10MFY08 whereas HSD's and Mogas's contributions remained 19 percent and 57 percent (76 percent combined). FO growth of around 6 percent came amid Wapda and other IPPs' scaled demand due to reduced gas supplies to power plants during most of 10MFY08 (slower growth amid 97 percent steep rise in its price in July-Apr, 08 while 49 percent increase on year-on-year basis).
The POL products consumption in April-08 posted growth of 8.77 percent on year-on-year basis with White Oil growing by 13.5 percent on yearly basis - mainly driven by Mogas (25.4 percent), HSD (10.6 percent) and Kero (42.0 percent on yearly basis). The government's price pass-on and the widened gap between regulated products and alternatives like CNG and LPG have impacted HSD and Mogas volumes in April-08 growing by only 7 percent and 3 percent on month-on-month basis (9.4 percent and 12.0 percent on monthly basis in March 2008), respectively.
Schehzad said that Kero's growth was also a result of its constant price coupled with greater usage among rural areas amid electricity breakdowns. Greater hassle and increased waiting time at CNG fillings due to greater price differential also compelled people to go for HSD and Mogas (low-base effect too).
Black Oil marked a growth of only 2.89 percent on year-on-year basis (3.7 percent for FO and 40.1 percent for LDO) in April-08 amid higher FO prices (97 percent up on yearly basis) and sharp decline in LDO consumption owing to rising prices and low agricultural activities amid late harvest observed.
Pakistan State Oil (PSO) secured largest slice of 76 percent of the market share pie in 10MFY08 against 68 percent last year by punching in an extraordinary volumetric growth of 25 percent on yearly basis in volumes. Shell stood with 14.9 percent on yearly basis - a 100bps improved share due to 16 percent volume growth while APL shared 5.4 percent of the market - a slight decline of 9bps on yearly basis due to registering slow volume growth of only 2 percent in 10MFY08.
Khurram Schehzad said that the summers with expected power breakdowns may stimulate FO and HSD demand for IPPs and household generators. However, prices in international market with regular pass-on may cut consumption. "Thus, we expect FY08 growth to range between 10 percent to 12 percent, revised downward by 200bps," he added.
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