Staff Report
ISLAMABAD: Pakistan oil sales in December 2022 dropped by 14 percent month-on-month (MoM) to around 1.34 million tons amid an overall slowdown in the economy.
Experts cited the seasonal trend of slowdown in December, furnace oil’s lower demand for power generation, and an overall slowdown in the economy as the key reasons behind the current downward trend in oil prices.
This is the lowest monthly sales since the first COVID lockdown period in February and April 2020. Furnace Oil/High-Speed Diesel (HSD)/Motor Spirit Petrol (MS) declined by 10, 22, and 8 percent MoM, respectively.
Meanwhile, oil sales dropped by 11 percent Year-on-Year (YoY) in December 2022 due to a fall in all major petroleum products; MS declined by 11 percent YoY, HSD came down by 15 percent YoY, and FO by 3 percent YoY.
The YoY drop in oil sales is mainly due to higher fuel prices, lower FO-based power generation, and an overall reduction in economic activity.
Petroleum companies also record a decline in sales
Among the listed entities, Pakistan State Oil (PSO) recorded a decline of 23 percent MoM and 9 percent YoY to 626,000 tons. PSO’s market share marginally improved to 47 percent in December 2022 compared to 46 percent for the same time last year. Meanwhile, Attock Petroleum (APL) sales dropped 9 percent MoM and 16 percent YoY. In contrast, the sales of Shell Pakistan (SHEL) decreased by 4 percent MoM and 18 percent YoY.
APL and SHEL’s market share for December 2022 was 9 percent and 8 percent, respectively, compared to 10 percent and 9 percent in December 2021.
Oil sales were down 19 percent YoY to 9.03 million tons due to the economic slowdown, with a decline visible in all major petroleum products during the fiscal year’s first half. Higher prices of MS and HSD also significantly impacted the demand.
Product-wise, FO and HSD suffered the sharpest drop, with a decline of 24 percent and 23 percent YoY, respectively, while MS sales declined by 15 percent YoY in 1HFY23.
The analysts said FY23 oil selling was projected to drop by 20 percent YoY, mainly due to the overall downtrend in the economy. Meanwhile, local prices are set to remain high due to lower government fiscal space, which would continue to dent demand.
