Byco Petroleum Pakistan Limited is engaged in the refining of various petroleum products including liquefied petroleum gas, light and heavy naphtha, kerosene, HOBC, motor spirit, jet fuels, HSD and furnace oil. The company was formed in January 1995 as a publicly listed company. The first refinery began operations in 2004. By 2007, through a major revamp, Byco expanded the capacity to 30,000 barrels, and then by another 5,000 barrels per day to 35,000 in 2010.
The firm enjoys presence in both mid-stream and downstream sector of the oil business. In 2007, Byco launched its fuel marketing activities managed by the Petroleum Marketing Business (PMB). This segment has grown remarkably over the past few years. Byco also has the largest capacity for crude oil storage tanks in the country and has retail outlets in more than 80 cities all over Pakistan.
In addition, a refinery with a production capacity of 120,000 barrels per day and an aromatics-based petrochemical complex were planned to expand existing production. The expansion was completed in December 2012 taking Byco's total refining capacity to 155,000 bpd.
Byco is Pakistan's largest oil refiner by design capacity, and is the only firm having a dedicated Single Point Mooring (SPM) in the country. The SPM can handle more than 12 million tonnes of product each year. Currently, this SPM alone is handling around 26 percent of Pakistan's crude oil imports. Byco Petroleum Pakistan Limited today represents the country's largest refining complex of 155,000 barrels per day with backward and forward integration in the form of Single Point Mooring (SPM) facility and oil marketing license, respectively.
Byco Isomerisation Pakistan (Private) Limited (BIPPL), which is a wholly owned subsidiary of Byco Petroleum Pakistan Limited, was completed in 2018. The isomerisation plant has a capacity of processing 12,500 barrels per day. Located in Balochistan, the plant is used for converting light naphtha into premium motor spirit.
Shareholding at Byco Petroleum
Byco Industries Incorporated (BII), Mauritius is the ultimate parent company and Byco Petroleum Pakistan Limited (BPPL) is the subsidiary. All Byco companies that existed previously have been merged into BPPL. The High Court of Sindh in January, 2017 approved the merger of Byco Oil Pakistan Limited and Byco Terminals Pakistan Limited with and into Byco Petroleum Pakistan Limited.
Over 90 percent of Byco Petroleum Pakistan Limited is held by Byco Industries Incorporated, Mauritius whereas banks and financial institutions hold around 4.5 percent. The illustration shows the complete breakup of the shareholding.
Past performance
Byco Petroleum Pakistan's financial performance has been continuously improving over the years. The company has turned things around by moving away from losses to rising profitability. Margins have come out into the profitable zone since 2015 and marked improvement in earnings has come from continuous expansion and up gradation strategies.
Last four years have specially been lucrative for Byco Petroleum. Even though FY15 was extremely challenging for the entire oil sector and especially for the refineries that witnessed a sharp decline in crude and product prices, Byco was able to post profits for the period. During that year, Byco Petroleum Pakistan Limited witnessed increased volumes, but revenues suffered at the expense of low oil prices. Improvement in gross profit however, came from increase in sales volume coupled with increased level of production that resulted in high absorption rate of manufacturing overheads and improved marketing margins. Moreover, an effective supply chain management coupled with a lower inventory holding period allowed the company to curtail its inventory losses. The company enhanced its oil marketing business by expanding its retail outreach.
FY16 was another challenging year for the oil sector as declining price trend continued to persist. Byco witnessed a fall in revenues by 16 percent year-on-year. However, volumes continued to move up, High sales volume, import of products at competitive pricing and improved marketing margins lifted the earnings to its highest.
The company continued on growth trajectory in FY17 as well where earnings went up by over 50 percent, year-on-year. The year also marked the bringing back of the 120,000bpd refinery into operations. For the company's expansion plans, AAA rated Sukuk certificates worth Rs3.2 billion were issued.
After four years, oil prices started to rebound in FY17, which together with higher sales volumes, especially those of motor spirit, were the growth factors for Byco. Also, better refining and marketing margins and import of products at competitive pricing helped the company.
The firm continued to increase its penetration in retail sector through its 300 retail stations across the country. Byco Petroleum Pakistan Limited, also for the first time in Pakistan, brought crude vessel of over 102,000 metric tons at its SPM facility - largest crude vessel ever berth in any port of Pakistan.
Byco in FY18
FY18 was a phenomenal year in terms of company profitability; Byco Petroleum witnessed a staggering growth of 130 percent in its earnings where net sales climbed by around 88 percent, year-on-year. Apart from increasing oil prices, volumes continue to play a role in the company's profitability.
The firm's annual report highlights that the key factor for growth in earnings in FY18 came from the successful commissioning of the second refinery (ORC-II) in August, 2017, and the successful startup of Byco's catalytic reformer of ORC-II in February, 2018. This second refining unit is the largest oil refinery in the country with a design production capacity of 120,000 barrels per day. Moreover, the catalytic reformer enables Byco to convert up to 24,000 barrels of heavy naphtha into motor spirit per day. Byco also continues to focus on expansion of the retail network with 344 retail outlets across the country.
Outlook
In July 2018, Byco Isomerisation Pakistan (Private) Limited successfully commissioned the isomerisation unit that converts naphtha into premium petrol. And the company believes that going forward; this will drive additional growth in Byco's refining margins.
Apart from volatility in oil prices and depreciation currency, key challenges that the refining segment faced in FY18 was the curtailment of furnace oil. Low consumption of furnace oil was also a challenge for Byco Petroleum; however, the company plans on investing in upgrading its furnace oil into value added products like diesel and petrol. Apart from that, the company also plans on further expanding its refining capacity and retail outreach, aiming to add 50 retail sites each year.
Source: Company Accounts
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