Overall refineries' sales have dropped by six percent on month-on-month basis to 669,000 tons in April 2011. "The circular debt continued to take toll on refinery operations in April 2011 with major refineries in the country cutting down supplies to the leading marketing company Pakistan State Oil (PSO)," analysts said.
In terms of individual products, gasoline (Mogas), high speed diesel (HSD) and furnace oil (FO) contributed 37 percent, 35 percent and 30 percent respectively, in cumulative decline during April 2011 while some support was realised through Kero and aviation fuels. Among individual refineries, a more severe downfall was witnessed in Byco Petroleum Pakistan Limited (Byco) with its sales going down by 49 percent on month-on-month basis. Byco's FO supply dropped by hefty 65 percent while its contribution to total industry FO supply also thinned down to three percent from average seven percent realised during the first 10 months of FY11.
Attock Refinery Limited (ATRL) posted thinner Mogas and HSD supplies, lower by 17 percent and two percent in April 2011, while its FO supplies actually improved by seven percent. On the other hand, National Refinery Limited (NRL) showed a decline of 10 percent in its FO sales while its HSD sales improved by five percent in April 2011. In terms of product efficiency, industry's white oil yield remained flat with nominal one percent growth. Individually, ATRL showed a decline of eight percent in its white oil yield due to lower HSD and Mogas output while NRL's yield improved by seven percent as it was able to sustain higher HSD sales during April 2011.
Byco also showed a whopping 77 percent rise in its yield but the same is attributed to lower relative FO sales. As per estimates, industry's GRM improved by 69 percent to $2.9/bbl (based on actual product mix for the month) during this month, Farhan Bashir Khan, an analyst at Invest Capital and Securities said. He said margins for both ATRL and NRL improved during the month, to $4.2/bbl and $2.6/bbl respectively. For NRL, turn towards higher margin was realised due to higher HSD yield, while growth in GRM for ATRL was restricted as its product yield declined during the month.
The only outlier in terms of GRM was Byco, which estimated to have a much higher GRM of $3.6/bbl in April 2011. However, the same can only be attributable to turnaround in sales mix. Much lower volumes for BYCO (utilisation drop to 22 percent in April 2011) are going to offset impact of high margins and the spike is only temporary and less meaningful.
He said that the volumes are expected to show improvement in May 2011 as the government was able to retire Rs 120 billion worth of debt during the first week. Based on the movements in oil prices and predetermined local product prices, May 2011 GRMs for the industry are estimated to slide down by 36 percent on month-on-month basis (assuming product mix normalises to last nine months of FY11 trend). GRM for ATRL is estimated to remain flat at $4.2/bbl while NRL's GRM would turn down to $1.07/bbl, offsetting the improvement witnessed during April 2011. BYCO is also estimated to be pushed back towards negativity in terms of GRMs.
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