Refinery production falls 18 per cent

Refinery production declined by 18 per cent to 1.2 million tons in August on a year-on-year basis mainly due to production stoppage at Parco following recent floods.

Looking at product-wise break-up, the decline in industry output is mainly reflected in furnace oil and jet fuel output which have tumbled by 20 per cent and 28 per cent, respectively during the same period.

In addition, production of other key products including high speed diesel and motor gasoline also fell by 13 per cent and 16 per cent, respectively on a yearly basis.

Parco down

The floods devastated Pakistan Arab Refinery Company (Parco), the largest mid-country refinery, and transportation network in the surrounding region forcing the refinery to cut down its supplies, said JS Global Capital analyst Umer Ayaz.

Resultantly, Parco’s production fell by 42 per cent and stood at 338,000 tons during the first two months of the current fiscal year, said Ayaz in the company research report.

Parco’s market share also fell drastically to 25 per cent in August from the preceding month’s 41 per cent.

Production to improve

Although refinery production has remained under pressure for a while due to the ongoing circular debt issue, the significant production decline is a one-off event for the sector and production levels are expected to normalise once Parco becomes operational again, expected by the end of this week, said Ayaz.

Parco saw its production fall by a huge 78 per cent on monthly basis to 60,000 tons in August.

Attock Refinery Limited and National Refinery Limited also saw a 5 per cent and 15 per cent dip, respectively, on a monthly basis in their production due to lower production of high speed diesel and furnace oil following a sluggish demand from power and agriculture sectors, said Ayaz.

Pakistan Refinery Limited on the other hand managed to increase its production by 18 per cent to 128,000 tons.

Published in The Express Tribune, September 16^th, 2010.