Downstream volumes – pumped up

Summers herald increased petroleum consumption; the rising trend in petroleum consumption has been witnessed again as the warmer season approaches. The demand-driven volumetric sales of the downstream oil sector have been trotting up, depicting industry-wide sales of over 23 million tonnes of POL products in 11MFY17 – an increase of over 11 percent annually, with the 11-month figure higher than total sales for FY16.

Most of the growth comes from the three key products: furnace oil, high speed diesel, and motor gasoline, together accounting for 10.7 percent year-on-year increase in volumetric sales of the OMC sector. Product-wise, the largest climb was seen in the retail fuels (MS and HSD both up by 16% and 10% YoY, respectively), followed closely by furnace oil (increase of 8% YoY).

The seasonal up tick in volumes comes primarily from the rise in fuel consumption by the power sector as well as increased petrol consumption in generators, while the usual industry factors that have added to the demand growth are the lower oil prices, curtailed CNG consumption, and higher diesel usage due to transportation growth and vehicular sales.

On the competitive landscape, PSO regained its total market share in May 2017 to 54 percent from 52 and 53 percent in April and March, respectively. Hascol led the growth in market share in May 2017. The overall market’s share for 11MFY17 depict similar trend as shown in the table.

Expansion is on the cards in the downstream refinery and OMC sector; new refineries, upgrades in existing refineries, ports, retail outlets, storage, and pipelines are being planned. Hascol’s growth story has been in the spotlight. During the first quarter of CY17, the firm’s sales volume grew by 29 percent year-on-year, which made Hascol the second-largest oil marketing company in Pakistan, in terms of volume. The firm was able to commission its installation in southern Punjab, while work on storage facilities is underway, which would give a boost to Hascol’s sales volumes.

APL is also working on its retail development programme to target prime locations in different parts of the country. State-of-the-art retail facilities and petrol pumps are being established to ensure market presence.

While PSO remains vulnerable with the piling of receivables of the energy chain, it leads with the highest market share; and any improvement in the situation can boost its share even higher. In short, petroleum sales can be seen to keep inching up in the coming months.