Total refinery output falls nine percent in first seven months

The total refinery production in the country has declined by 9 percent in the first seven months of FY11 as compared to the same period last year. However, only in the month of January 2011, the local refineries operated at 73 percent capacity utilisation and produced 714,000 tons of oil products, up five percent on year-on-year basis.
"The reduction in refinery production in the country was mainly led by circular debt and shutdowns of few refinery amid maintenance and operational issues," analysts said. "With circular debt still growing, the only hope for the refineries to sustain their business operation is better GRMs which have remained volatile due to fluctuations in international crude oil markets," Nauman Khan, an analyst at Topline Securities said.
"In the long-term we believe the fate of deemed duty would be the chief factor that will determine refineries' production," he added. Benefiting from improved refining margins, domestic refineries improved their capacity utilisation to 73 percent in January, 2011 as compared to 69 percent in January 2010 which led to increase in production to 714,000, up five percent on year-on-year basis. However, during the seven months of FY11 capacity utilisation remained on the lower side standing at 67 percent and that is why production stood lower at 4.3 million tons, down 9 percent on year-on-year basis, he said. He said that the company wise production details show that, Attock Refinery (ATRL) and National Refinery Limited (NRL) were the only two refineries that depicted improvement in their throughput. During the seven months of FY11, ATRL and NRL throughput increased by a significant 20 percent and 38 percent to 871,000 and 972,000 tons, respectively.
On the other hand, Parco (Pakistan's largest refinery) throughput declined on account of a month long shutdown caused by devastating floods whereas due to revamping and circular debt issues BYCO production remained on the lower side.
During the seven months of FY11, despite reduced throughput Parco continued to lead the pack with the market share of 34 percent, followed by NRL, ATRL and PRL at 22 percent 20 percent and 19 percent, respectively. BYCO market share stood at 5.2 percent for the period under review. The product wise break up shows that FO and HSD, which contribute 40 percent and 31 percent share, in industry production, their production declined by 6 percent and 8 percent, respectively.