Pakistan oil sales in Mar-2023 decreased by 9% MoM to 1.11mn tons mainly due to 1) lower demand of FO for power generation, and 2) slowdown in overall economic activity due to Ramadan effect.

This is the lowest monthly sales number in 35 months, since Feb-Apr 2020. FO/HSD declined by 28/17% MoM respectively. MS slightly increased by 1% MoM.

Oil sales recorded 39% YoY decline in Mar-2023 due to fall in all major petroleum products; MS down 28% YoY, HSD down 43% YoY, and FO down 70% YoY.

Among the listed entities, Pakistan State Oil (PSO) posted a decrease of 10% MoM and 44% YoY to 536k tons. PSO’s market share decreased to 49% in Mar-2023 compared to 52% in Mar-2022.

Attock Petroleum (APL) sales declined 1% MoM and 30% YoY. While, Shell Pakistan (SHEL) sales decreased by 15% MoM and by 38% YoY. APL and SHEL market share for Mar-2023 was 10% and 8% respectively compared to 9% and 8% share in Mar-2022.

During 9MFY23, oil sales are down 21% YoY to 12.8mn tons due to economic slowdown with decline visible in all major petroleum products. Higher inflationary environment, particularly the prices of MS and HSD have had a major impact on demand.

Product wise FO and HSD have witnessed major drop with a decline of 33% and 25% YoY respectively, while MS sales declined by 16% YoY in 9MFY23.

We expect FY23 oil sales to drop by 20-25% YoY, mainly due to overall slowdown in the economy. Demand will continue to remain muted due to elevated inflation levels and inability of government to provide any relief in oil product prices.

Courtesy – Topline Securities