National Refinery Limited (NRL) reported a gross refining margin (GRM) of US$11.95 per barrel for FY26, supported by positive margins on petrol, diesel and lube base oils, while losses on furnace oil and certain export products weighed on profitability, according to AHL Research following the company’s Annual General Meeting (AGM).

The research house said management highlighted growing challenges in crude procurement due to the closure of the Red Sea route, with the refinery increasingly relying on supplies routed through Fujairah. NRL also noted that heavy crude import requirements continue to drive short-term borrowing needs, with each crude cargo costing around PKR20-30 billion.

According to AHL, NRL is conducting a feasibility study with the UK’s Foster Wheeler to determine the scope and cost of its refinery upgrade project, which could require investment of up to US$1.5-1.8 billion and aims to enhance fuel quality while reducing furnace oil output.

Management further said capacity utilisation improved to 70% in FY26 from 56% a year earlier and expressed confidence it will increase throughput in FY27 despite supply challenges. AHL added that dividend distributions remain on hold as the company prioritises cash preservation for future expansion and balance sheet strengthening.