In September, Pakistan’s oil sector faced a severe setback, hitting itslowest point since the COVID-19 lockdown in March 2020. Data from the OilCompanies Advisory Council for the month paints a bleak picture, revealinga significant 34% year-on-year drop in petroleum product sales, plummetingto just 1.06 million tonnes.
The main factors contributing to this sales collapse are the surgingpetroleum prices, a decrease in overall demand, and increased pressure onthe capacity of oil marketing companies (OMCs). Taking a closer look, salesof furnace oil saw a steep decline, plummeting by 72% year-on-year to amere 0.08 million tonnes.
Similarly, sales of motor spirit (petrol) and high-speed diesel alsosuffered, decreasing by 18% and 24% year-on-year, respectively, to 0.52million tonnes and 0.39 million tonnes. On a month-on-month basis,cumulative petroleum sales contracted by 28% in September 2023, withfurnace oil, petrol, and diesel sales all declining by similar percentages.
In Q1FY24, total petroleum sales witnessed a 16% year-on-year slump,reaching a disappointing 3.77 million tonnes, a significant contrast to therobust 4.49 million tonnes recorded in the same period last year. Allproduct categories saw reductions, with petrol, diesel, and furnace oiloff-takes standing at 1.85 million tonnes, 1.44 million tonnes, and 0.35million tonnes, respectively.
Analyzing OMC performance, Pakistan State Oil’s (PSO) off-take droppedsignificantly by 37% year-on-year in September 2023 due to declining salesof petrol, diesel, and furnace oil by 13%, 23%, and a staggering 94%,respectively. Similarly, Hascol, Attock Petroleum, and Shell’s dispatchesalso decreased by 12%, 13%, and 30% year-on-year, respectively.
On a cumulative basis for Q1FY24, petroleum sales of PSO, Shell, andAttock Petroleum decreased by 19%, 16%, and 7% year-on-year, respectively.In contrast, Hascol’s off-take demonstrated a healthy growth of 35%year-on-year. By the end of Q1FY24, PSO’s market share had slipped by 1.7%to 50.8%, compared to 52.4% in the same period last year.
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Shell’s market share remained unchanged at a modest 7.2% year-on-year.Attock Petroleum and Hascol’s market shares increased to 10.8% and 2.7%,respectively. The cumulative market share across the remaining OMCsremained stable at a substantial 28.5%.
As for the reasons behind this collapse, industry experts attribute itprimarily to soaring petroleum prices. Pakistan witnessed record-highpetroleum product prices in September, with diesel rising by 12% from Rs293/litre in August 2023 to Rs 330/litre in September, and petrol pricesincreasing by 14% from Rs 290/litre in August 2023 to Rs 331/litre.
The decline in personal usage, coupled with adverse weather conditions,further dampened demand. Additionally, the fluctuating nature of pricechanges contributed to reduced sales, as dealers stocked up at thebeginning of the month and reduced inventory towards the end.
Finally, the oil sector’s trade financing requirements and constraints havehindered its ability to sell petroleum products effectively.
