Refining margins firm in May

Deemed duty’s contribution rises to highest since fiscal 2008.

KARACHI:

Refining margins rose four per cent to $4.58 a barrel in May on a monthly basis, taking the current quarter’s average to $4.95 a barrel.

As oil prices jumped 23 per cent during fiscal 2011, deemed duty’s contribution rose to its highest of 2.72 a barrel since fiscal 2008, says an Elixir Securities research note.

Deemed duty is a tax collected by refineries at the time of product sales. Deemed duty has been in the limelight lately with initial reports that the government might decrease it from the current level of 7.5 per cent in the upcoming budget, however rumours later spread that the duty will remain intact.

High Sulphur Fuel Oil, a refinery product, spread improved by $3.09 a barrel due to tight supply situation and remained the main factor behind the increase, the note adds.

Company margins

National Refinery’s margins eased 6 per cent to $6.4 per barrel due to higher share of high speed diesel. Attock Refinery’s margin jumped by 11 per cent to $4.38 per barrel, driven by higher share and spread of motor fuel, whereas Pakistan Refinery’s increased by $0.53 per barrel.

Published in The Express Tribune, June 2^nd, 2011.