KARACHI (October 08 2010): The oil consumption in the country has declined to 4.7 million tons during the first quarter of FY11, 7 percent lower than the same quarter last year. The oil consumption continued to post weak data following the flash floods as demand dipped 6 percent in September 2010 as compared to the same month last year.Likewise, oil sales were 2 percent lower from the previous month as the seasonal Ramadan effect kicked in as well. Analysts said that the shutdown of some power plants due to flood inundation and improved hydel generation ability proved demand dampener for furnace oil (FO), while retarded agricultural activity dragged down diesel sales. Hence, consumption in the first quarter of FY11 was down 7 percent on year-on-year basis.Atif Zafar, an analyst at JS Global Capital said that shutdown of some power plants due to inundation, in particular AES and hydel power generation ability improving to approximately 6,000MW, were key factors behind an 8 percent drop in furnace oil (FO) sales to 2.2 million tons. “However, with AES expected to resume operations by November-end and hydel generation expected to shrink in winters, we expect FO’s demand to witness near-term recovery,” he added.He said with the rural landscape most affected by the floods, agricultural activity (primary determinant for diesel sales) has come to a near standstill. As a result, diesel sales were down 14 percent on year-on-year basis to 1.5 million tons and it is expected to remain weak in the coming months too.
He mentioned that reduced price differential with CNG has boosted the sales of motor spirit by 17 percent to 5,48,000 tons. Possible resumption in CNG load shedding during winters should facilitate the sales trend to continue to move up. Primarily driven by exports to Afghanistan, sales of jet fuel were up one percent on year-on-year basis. Recent disruptions in Nato’s supply to the country may hamper sales for the product in the upcoming months.He said that PSO being the market leader and having the most prominent presence in the flood affected areas lost out in terms of market share to APL and Shell. PSO’s sales were down 12 percent on year-on-year basis compared to a year-on-year increase of 18 percent and 15 percent in APL and Shell’s volumes, respectively. APL continued to reap benefits of higher FO supplies to Attock Gen (group company), whereas initiation of supplies to Nishat’s power plants boosted Shell’s volumes – Brecorder