Refinery operations declined for the third straight year despite surge in international oil prices advocating improved operating environment.
Refinery operations declined by 4.4 per cent to 7.7 million tons as against 8.1 million tons last year primarily due to a month long plant shut down of Pakistan’s largest refinery, Pak-Arab Refinery Company, on account of floods, according to a Topline Securities research note.
In addition, maintenance shut-down of Attock Refinery, Pakistan Refinery and Byco also contributed towards the decline. Flood and operational issues led to decline in capacity utilisation to 68 per cent from 70 per cent last year. Subsequently, the country’s reliance on imported petroleum product remained above 60 per cent in fiscal 2011 as well.
National Refinery was the only refinery to show an increase in its operations by a significant 18.4 per cent to 1.5 million tons with capacity utilisation standing at around 80 per cent against 70 per cent last year. Parco’s operations declined by 7.1 per cent to 3.1 million tons in the outgoing financial year.
Individual company market shares
The divergent trends in the operations had subsequent impact on individual company’s market share. Although Parco maintained its top-slot, its market share dropped by approximately one percentage point to 39 per cent. Major gainer was National Refinery which enhanced its market share by around four percentage points to 20 per cent.
Attock Refinery increased its share by one percentage points to 19 per cent. PRL was able to maintain its market share, while Byco lost its market share by a 2.4 percentage points to a mere 5 per cent.
Product mix change
Noteworthy development this year was a significant change in the product mix of the individual refineries. One the one hand, Attock Refinery and Pakistan Refinery tweaked their production mix to yield higher superior products like high speed diesel, which will have a positive bearing on individual companies’ profitability, says the note. On the other hand National Refinery’s product mix shifted towards inferior products like furnace oil that carries negative spread over crude oil, adversely affecting the company’s fuel refinery operations in the future, says the note.
Published in The Express Tribune, July 8th, 2011.
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