Business

Refinery production down 14 per cent

The country’s oil refineries produced just 1.8 million tons during July to September.

Express October 11, 2010

KARACHI: The country’s oil refinery production declined by a significant 14 per cent to only 1.8 million tons during July to September on a yearly basis as floods resulted in a halt to some of the operations.

Pak-Arab Refinery Company (Parco), which contributes 35 per cent to the country’s total refinery capacity, had to curtail its operations on account of recent flood crisis and its devastating impact on the domestic infrastructure, according to InvestCap.

Parco had to shut its operations for approximately a month between August and September causing it to produce a mere 456,000 tons of refined oil, down by a massive 47 per cent, according to data released by the Oil Companies Advisory Committee.

On the other hand, Attock Refinery (ARL) and National Refinery (NRL) remarkably went into over-drive to bridge the demand-supply gap arising from the slowdown in Parco, said InvestCap analyst Nauman Khan.

ARL and NRL production registered a massive increase of 25 per cent to 427,000 tons and 79 per cent to 444,000 tons, respectively, as the companies operated at 105 per cent and 90 per cent of their capacities during the first quarter of fiscal year 2011.

Production by other refineries, Pakistan Refinery (PRL) and Byco Petroleum, were down 11 per cent and 56 per cent at 384,000 tons and 71,000 tons, respectively.

Better days ahead

With Parco coming back completely online from September 20, the country’s refinery production is expected to show a significant improvement in October, Khan said in the company research report.

On the other hand, ARL is expected to go for its partial maintenance shutdown during October to December which will reduce the company’s production in the corresponding period, Khan added.

The oil refinery sector is expected to post improved returns going ahead on account of improved gross refinery margins during the first quarter of 2011 and improved production of the listed sector.

Change in market leader

Parco’s market share declined by a massive 18 percentage points (pps) to 24 per cent during the first quarter on account of reduced production.

On the other hand, ARL and NRL were able to improve their market shares by a significant 9pps and 14pps to 25 per cent and 26 per cent, respectively, amid escalated production levels. PRL was also able to improve its market share by 2pps to 22 per cent while Byco’s market share was down by 3pps to 4.9 per cent during the period.

Published in The Express Tribune, October 12^th, 2010.

COMMENTS (1)

Amar Abbas | 14 years ago | Reply Besides floods, other problem refineries are facing is liquidity problem due to circular debt. Only Parco receivables have swelled up to 43 billion from PSO and others. Refineries take loans from banks to purchase crude from foreign countries despite the fact that they are profitable on balance sheet. Our country people will be surprised that our installed power capacity is enough to fulfill demands of power in Pakistan but circular debt problem is badly hurting our economy. Our economic managers have to make a sound strategy to come out of this situation. They should not see the circular debt figure instead they should think that what will be a positive impact on economy and improvement in GDP by solving this problem.

Replying to X