Refinery production down five per cent
KARACHI: Refinery production fell five per cent to 7.3 million tons in 2011-2012, compared with 7.7 million tons in 2010-2011, which made it the fourth consecutive year with a declining trend.
This was mainly due to a reduction in domestic gross refinery margins, especially during the later part of the year, according to Nauman Khan, an analyst at Topline Securities Ltd.
Other reasons for the decline in production included constrained capacity utilisation, liquidity problems of certain refineries, therefore increasing the country’s reliance on impacted petroleum production by 100bps to 61pc.
According to Khan, capacity utilisation declined to 65 per cent as against 68 per cent in 2010-2011. However, there was a divergent trend among the individual refineries, with Attock Refinery Limited (ATRL) and Pakistan Refinery Limited (PRL) showing an increase in production, while the other three major refineries such as Pak Arab Refinery (PARCO), National Refinery Limited (NRL) and BYCO, registering a decline.
During the year, ATRL and PRL capacity utilisation improved approximately by 91 per cent and 77 per cent, compared with 88 per cent and 71pc in 2010-2011, respectively.
Byco’s capacity utilisation declined to 14 per cent as against 33 per cent last year, as refinery was not operational for the larger part of the year. PARCO and NRL’s, capacity utilization declined to 63 per cent and 76 per cent versus 80 per cent and 68 per cent last year, respectively.
However the positive development during the year was the improved product mix of all the major refineries as they skewed their product mix towards high margin diesel and petrol and away from loss making furnace oil.
Meanwhile, the country’s oil consumption also declined, for the second consecutive year, by three per cent in 2011-2012 to 19.1 million tons as against 19.7 million tons in 2010-2011.
The reduction is primarily due to a seven per cent decline in furnace oil sales which account for approximately 45 per cent of the total oil consumption. Cash problems amid circular debt prompted power units to consume lower furnace oil for electricity generation, which declined by seven per cent to 8.4 million tons.
The power sector consumed five per cent lower furnace oil and sale of high speed diesel also fell one per cent to 6.8 million tons.