Oil sales dip 7 percent to 1.91mln tons in November

KARACHI: Oil sales dipped seven percent year-on-year to 1.91 million tons due mainly to lower sales of furnace oil, an analyst said on Wednesday.
Oil Companies Advisory Council recorded 2.06 million tons in the same month a year ago. Sale of furnace oil sharply fell 29 percent to 401,798 tons in November as compared to the corresponding month a year earlier, while high speed diesel sales decreased two percent to 851,483 tons. Sale of motor spirit, however, increased six percent year-on-year to 565,846 tons in November.
Sales of petroleum products increased five percent to 10.79 million tons in the first five months of the current fiscal year of 2017/18. Furnace oil sales declined seven percent to 4.13 million tons in July-November as compared to the same period a year ago.
But, sale of motor spirit rose 13 percent to 2.77 million tons, while high speed diesel sales increased 12 percent to 3.51 million tons on account of ongoing infrastructural activities and robust automobiles sales. In October, government ordered closure of furnace oil-based power plants to pave the way for low-cost liquefied natural gas (LNG) and coal-based power plants.
Consequently, all the furnace oil/diesel- based power plants with a cumulative capacity of 4,250 megawatts were shut down for one month after resuming operation. Government planned to convert or close furnace oil-based power plants by the end of 2019 as LNG power projects are fast changing the energy mix of the country.
“We believe oil volumes will continue to grow on the back of higher automobile sales, and infrastructural development,” Waqas Ahmed, an analyst at Taurus Securities Limited said. “Also, we expect moderate inventory gains due to a soft increase in crude oil prices.”
Oil sales dropped 22 percent in November over October as furnace oil sales fell 55 percent and sale of motor spirit declined nine percent, whereas high speed diesel sales increased two percent month-on-month. Ahmed said sales of furnace oil and high speed diesel would improve in the upcoming months due to sugar crushing season.
In the long-term, furnace oil sales would drop as 2nd LNG terminal has become operational to provide re-gasified LNG to power plants in Punjab and an expected two times surge in LNG imports to 1.2 billion cubic feet per day.
“Over the long-term, we maintain our positive stance on the sector emanating from anticipated growth in automobiles sales, lower CNG (compressed natural gas) and MS (motor spirit) price differentials, and ongoing infrastructure development activities,” Ahmed added.