Petroleum sales for FY17 stood at a little over 25.5 million tons, an increase of nine percent year-on-year – a historical growth even though June volumes remained soft.
Overall petroleum volumes sold by the oil marketing companies in June 2017 were lower by 5 percent, year-on-year. Most of the growth comes from the three key products: furnace oil, high speed diesel, and motor gasoline. Product wise OMC sales for June 2017 shows that all three key products depicted a downward movement with the largest month-on-month decline in HSD (26.5 percent) and largest year-on-year decline in furnace oil (12.5 percent).
However, the trend in product sales for FY17 is a resilient one with Furnace Oil growing by 5 percent year-on-year; HSD by 9 percent year-on-year; and Motor gasoline by 16 percent year-on-year in FY17.
The rising trend in petroleum consumption was witnessed as warmer season approached. The seasonal uptick in volumes comes chiefly from the rise in fuel consumption by the power sector as well as increased petrol consumption in generators. On the other hand, the usual industry factors that have added to the demand growth are lower oil prices, curtailed CNG consumption, and higher diesel usage due to transportation growth and vehicular sales.
A look at the annual trend shows that motor gasoline has been on an upward trajectory unabated since FY07 - a CAGR of 2.3 percent over the ten-year period. Growth in HSD has been stable while the growth trend in furnace oil volumes that was contained in FY16, saw an uptick in FY17 once again primarily because of the power sector demand picking up as furnace oil prices came down.
At the firm level, Hascol has been the growth story for FY17. It has become the second largest OMC in terms of volumes and has gained a market share of 9 percent in FY17 versus 7 percent in FY16, leaving behind APL and Shell. PSO regained its total market share in FY17 to 56 percent from 55 percent last year.
While the OMC sector is prone to liquidity shocks, positives include some expansions planned in the downstream refinery and OMC sector; new refineries, upgrades in existing refineries, ports, retail outlets, storage, and pipelines are being planned, which would keep interest in the downstream sector intact, especially for the growth in retail fuel amid increased CPEC and auto sector related activities.
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