Petroleum sales fall 2% in September

Decline comes on back of subdued agricultural activity in Pakistan

Salman Siddiqui October 04, 2020
Prices of petroleum products unchanged for fifth consecutive month. PHOTO: EXPRESS


The sale of petroleum oil products dropped net 2% to 1.52 million tons in September mainly due to subdued activities in the agriculture sector of Pakistan.

The drop in sales would have been larger if consumption of furnace oil had not increased in the wake of growing gas crisis, as the government opted to resume production from expensive oil-fired plants to meet power demand in the country, experts said.

The overall sale of petroleum oil products stood at 1.55 million tons in the previous month of August, JS Research said citing data from Oil Companies Advisory Committee (OCAC).

“Demand for petroleum products, mainly for diesel, has declined due to near completion of harvesting season for summer crops (paddy/rice, sugarcane, maize and cotton) in the country,” Topline Research Deputy Head Shankar Talreja said while talking to The Express Tribune.

The agricultural activities slowed down after rainwater accumulation in the fields and urban flooding mainly in Sindh, he added. Breakdown suggested the sale of petrol and diesel decreased by 8% each to 0.64 million tons and 0.47 mil- lion tons, respectively, in September compared to 0.70 million tons and 0.51 million tons in August, respectively.

Petrol is mainly used by bikers and car commuters. Some of the households also use it for operating home- based power generators. The reason for drop in petrol sales, however, remained unknown as the month under review also saw more people commuting after remaining confined at home during the recent lockdown, while power load-shed- ding remained a challenge nationwide.

The sale of furnace oil, which is mainly used to generate electricity by independent power producers (IPPs), grew 20% to 0.37 million tons in September compared to 0.31 million tons in the prior month of August. The government switched- on some of the oil-fired power plants to meet demand for power consumers after some of the gas-based plant faced shortage of fuel due to a drop in supply of gas from domes- tic fields. Sui Southern Gas Company Limited (SSGC) has reported a significant drop in gas production due to falling of some five fields redundant in recent times.

In this backdrop, the sale of furnace oil surged to a two- month high in September. “Strong furnace oil (FO) demand from the power sector limited the overall monthly decline in POL (petroleum, oil and lubricant) sales; September 2020 saw the highest monthly sales in FO since Jul-2018,” JS Research analyst Ali H Zaidi said in a brief report on POL sales.

The sale of petrol and diesel dropped, while furnace oil up also dropped compared to September year-on-year.

Overall, the first quarter (Jul- Sep) of FY21 saw strong volu- metric sales of 4.74 million ton, reflecting an increase of 14% on a quarter-on-quarter basis, and 8% on year-on- year basis.

On a year-on-year basis, increases were seen across three major contributors; petrol sales up by 6%, diesel by 7% and furnace oil by 28%. “Strong furnace oil sales are likely to prevail in the com- ing months as FO-based gen- eration continues due to gas supply issues,” Zaidi said.


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