|Friday, 27 July 2012 14:21|
The declining trend in refinery production continued for the fourth consecutive year with throughput down five percent in FY12 to 7.3 million tons, analysts said.
"We believe, reduction in domestic gross refinery margins (particularly towards the later part of the year) stands out as the major reason behind constrain capacity utilisation accompanied by liquidity problems of certain refineries", Nauman Khan, an analyst at Topline Securities said.
Resultantly, country reliance on impacted petroleum production rose to 61 percent, up 100bps from last year, he added. Refinery production, during FY12, declined by five percent to 7.3 million tons as against 7.7 million tons last year while capacity utilisation declined to 65 percent as against 68 percent in FY11.
However, there was a divergent trend amongst the individual refineries, with ATRL and PRL showing rise, while the other three major refineries (Parco, NRL and Byco) all showing decline in the production. During the year, ATRL and PRL capacity utilisation improved approximately 91 percent and 77 percent as against 88 percent and 71 percent in FY11, respectively.
On the other hand of the spectrum, Byco capacity utilisation declined to 14 percent as against 33 percent last year, with refinery remaining in- operational in large part of the year. Parco and NRL, capacity utilisation declined to 63 percent and 76 percent versus 80 percent and 68 percent last year, respectively.
"We believe former was with adverse operating environment on account of circular debt while the latter restricted its throughput due to lower margins", he said. The trends in the throughput subsequently impacted on individual company's market share.
Parco maintained its top slot but lost its market share by approximately 1pps to 38 percent, ATRL surpassed NRL to attain the second as it improved its market share from 19 percent to 21 percent, while NRL maintained its market share around 20 percent. But the major gainer of the year was PRL, whose market share rose to 19 percent as against 17 percent last year. On the other hand, major loser was Byco which lost its market share from 5.6 percent last year to 1 percent this year.
He said positive development during the year was improved product mix of all the major refineries of Pakistan. The refineries skewed their product mix towards high margin HSD (diesel) and MS (petrol) away from loss making FO (Furnace oil). Improved product mix is expected to positively affect the refinery margins going forward as well as reduce their exposures to circular debt, he added.
Courtesy: Business Recorder