Net refinery margins down 20%

Margins estimated to have dropped by 20 to 22 per cent to $3-3.5 per barrel in the FY11 Q1 on quarterly basis.

KARACHI: Net refinery margins are estimated to have dropped by 20 to 22 per cent to $3-3.5 per barrel in the first quarter of financial year 2010-11 (FY11) on a quarterly basis, according to Topline Securities.

However, these margins are still better than average quarterly margins of $0.5-1 per barrel last year, said Topline Securities analyst Farhan Mahmood.

Profitability of local fuel refineries is expected to be better in the first quarter of 2011, however, circular debt remains a key issue which has affected the output, he said in the company report.

Refining margin is likely to be around $3 to $3.5 per barrel in the first quarter of fiscal 2011, after witnessing margins of $3.8 to $4.5 per barrel in the fourth quarter of fiscal 2010.

The decline in margins is primarily due to lower spread on gasoline, said Mahmood.

Published in The Express Tribune, October 14^th, 2010.