Production of refineries falls 10%

KARACHI: Local refineries produced 6.8 million tons of petroleum products in 10 months (July-April) of the current fiscal year 2009-10, down eight per cent from the same period last year.

In April alone, refineries produced 689,000 tons, down 11.6 per cent year-on-year (YoY). Gross margins for refineries (GRMs) in April stood at $1.70 per barrel, up five per cent month-on-month (MoM) basis. Individually, Pak Refinery Limited (PRL) posted an increase of 175 per cent in margins to $0.10 per barrel, primarily on account of low base effect.

However, the major beneficiary was National Refinery Limited (NRL), which registered an increase of 25 per cent in gross margins which reached $1.93 per barrel in April. This coupled with the company’s already profitable lube business should help boost bottom- lines in the fourth quarter of fiscal year 2010. Gross margins of Attock Refinery Limited (ARL) declined to $0.24 per barrel.

Byco Industries registered a decline of six per cent MoM, but still posted strong gross margins of $3.35 per barrel. With the revision of petroleum product prices, it is expected that gross margins will decline by 26 per cent MoM to $1.25 per barrel, Invest Capital Investment Bank said in a research report on Friday. Capacity utilisation at 62% The refining industry’s capacity utilisation stood at 62 per cent with divergent trends among individual companies.

Among listed companies, ARL operated at around 75 per cent of its capacity, whereas PRL, NRL and Byco utilised 61 per cent, 46 per cent and 44 per cent respectively of their production capacities. Nauman Khan, an analyst at Invest Capital Investment Bank, said that production of local refineries is expected to increase from the first quarter of the next fiscal year starting July.

In terms of market share, Pak-Arab Refinery Co (Parco) continues to be the market leader with a 40 per cent share while the remaining share was divided among PRL, ARL, NRL and Byco. The Greek debt crisis has caused crude oil prices to fall back below $78 per barrel while petroleum product prices remained high.