Pakistan oil sales in Dec-2022 decreased by 14% MoM to ~1.34mn tons mainly due to 1) a seasonal trend of slowdown in December, 2) lower demand of FO for power generation, and 3) an overall slowdown in the economy.

This is the lowest monthly sales number since the first COVID lockdown period of Feb-Apr 2020. FO/HSD/MS declined by 10/22/8% MoM respectively.

Oil sales recorded 11% YoY decline in Dec-2022 due to fall in all major petroleum products; MS down 11% YoY, HSD down 15% YoY, and FO down 3% YoY.

The YoY drop in oil sales is primarily due to 1) higher fuel prices, 2) overall reduction in economic activity and 3) lower FO based power generation.

Among the listed entities, Pakistan State Oil (PSO) posted a decrease of 23% MoM and 9% YoY to 626k tons. PSO’s market share slightly improved to 47% in Dec-2022 compared to 46% in Dec-2021.

Attock Petroleum (APL) sales declined 9% MoM and 16% YoY. While, Shell Pakistan (SHEL) sales decreased by 4% MoM and by 18% YoY. APL and SHEL market share for Dec-2022 was 9% and 8%, respectively, compared to 10% and 9% share in Dec-2021.

During 1HFY23, oil sales are down 19% YoY to 9.03mn tons due to economic slowdown with decline visible in all major petroleum products. Higher prices of MS and HSD have also had a major impact on demand.

Product wise FO and HSD have witnessed the most major drop with a decline of 24% and 23% YoY respectively, while MS sales declined by 15% YoY in 1HFY23.

We expect FY23 oil sales to drop by ~20% YoY, mainly due to overall slowdown in the economy. Local prices are set to remain elevated due to lower government fiscal space, which would continue to dent demand.

Courtesy- Topline Securities