Oil sales rise in July as demand picks up pace

Volumes increase to 2.3m tons, up 8% year-on-year

KARACHI: perSales of petroleum products rose to 2.31 million tons in July 2017, up 9% month-on-month and 8% year-on-year, showed data released by the Oil Companies Advisory Council, as demand picked up in the wake of resumption of smooth transport activities after Ramazan and Eid holidays.

In June 2017, oil sales stood at 2.12 million tons whereas in July last year the figure was 2.14 million tons.

According to a report prepared by research house Shajar Capital, product-wise data depicted that motor spirit (petrol) sales increased from 566,000 tons in June to 617,000 tons in July, up 9%. Year-on-year, petrol demand rose around 14%.

High-speed diesel demand surged from 641,000 tons to 755,000 tons, up 18% month-on-month. On a year-on-year basis, diesel sales grew 36%.



“The substantial growth in motor spirit and diesel sales is attributed to a significant growth in auto and agricultural space,” said analyst Ayesha Fayyaz of Shajar Capital. Furnace oil sales inched up to 856,000 tons from 838,000 tons, an increase of 2% month-on-month.

Among oil marketing companies (OMCs), Hascol outperformed in the sector in July sales, achieving a tremendous 69% growth year-on-year.

Its petrol and diesel volumes rose 107% and 161% year-on-year, respectively. Consequently, the company’s market share widened 400 basis points to 11% in July 2017 compared to 7% in July last year, Fayyaz said in her report.

Pakistan State Oil (PSO), on the other hand, lost its market share by 200 basis points to 55% in July 2017. Shell Pakistan remained a major underperformer with a decline of 28.1% year-on-year and 26.4% month-on-month in sales volumes.

According to the analyst, fundamentals of the OMC sector are improving since Pakistan has the potential to improve its vehicle-to-people ratio, which is 16 vehicles per 1,000 people, a level that is quite lower than regional peers. India has a ratio of 22 vehicles per 1,000 people whereas Afghanistan has 49 vehicles per 1,000 people.

Another encouraging sign for the OMC sector is the increasing auto loans, which grew 34% in July on the back of a 42-year-low interest rate at 5.75%.

More positives for the sector include the upcoming Orange Cab scheme in which 50,000 vehicles will be offered to applicants, a pro-agriculture budget for FY18, which will increase diesel demand and anticipated growth in fuel demand in the backdrop of CPEC projects.

Published in The Express Tribune, August 4^th, 2017.

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