Pakistan oil sales commenced FY23 with a decline of 26% MoM to clock in at 1.44mn tons in July 2022 (lowest since Feb-21). This was mainly due to significant decline in all 3 petroleum products: High Speed Diesel (HSD) sales reduced by 38% MoM to 444k tons, Motor Gasoline (MOGAS) sales declined by 15% MoM to 594k tons and Furnace Oil (FO) sales dipped by 23% MoM to 350k tons.
Major reasons behind the decline in oil sales are, (i) Eid holidays during the first half of July where inter provincial transportation activity subsided which led to low HSD sales, and (ii) monsoon season across the country resulted in lower traffic on the roads.
Furthermore, increase in MOGAS and HSD prices by 26% & 41% since Jun-22 resulted in reduced demand of petroleum products and increase in usage of public transport & car pooling, we believe.
As compared to last year, Pakistan oil sales recorded 26% YoY decline in July 2022 which is owed to drop in MOGAS and HSD Sales by 27% YoY and 38% YoY, respectively. Excluding FO, oil sales were down 31% YoY and 26% MoM in Jul-22 to 1.1mn tons.
Among the listed entities, Pakistan State Oil (PSO) sales posted 27% MoM decline to 760k tons (lowest since Feb-22), mainly due to decline in HSD sales by 38% MoM. In terms of market share, PSO market share clocked in at 53% in Jul-22 vs. 52% in Jul-21.
Other companies such as Attock Petroleum (APL) and Shell Pakistan (SHEL) also recorded drop of 29% MoM and 37% MoM to 142k tons and 100k tons, respectively.
For FY23E, we expect oil sales to drop by ~15-20% YoY in FY23E, mainly due to (i) low growth estimated in agriculture sector, (ii) likely decline in auto sales, and (iii) increase in petroleum prices.
Courtesy – Topline Securities