Contrary to the earlier hue and cry raised by the
oil marketing companies over what they claimed that Pakistan offers
the lowest margin in the region, the financial results betrayed by
revealing that they earned probably the highest margin in the region.
Though the oil companies were allowed 3.5 percent
margin on the oil business, the phenomenal growth in oil consumption
and reportedly some loopholes in the price mechanism, the oil business
being carried out by the government-owned and private sector companies
has brought windfall profits reflected in their financial results.
Accordingly, Shell Pakistan's financial results for
the nine months ended March 31, 2005 showed a phenomenal growth in
earnings to Rs1.60 billion as against Rs0.81 billion during the
corresponding period of last year.
Sales marked a 27% increase and gross margins
improved by 142bps. Shell Pakistan has, however, attributed the
improved profitability to better product mix and higher international
oil prices. Shell has also stated that the aviation business continues
to show a growing trend and volumes in the current quarter show an
improvement of 20% from the same period last year. This is mainly the
consequence of higher exports during the current quarter.
Shell's profitability during 9 months of the
current financial year has received a considerable uplift on the back
of the approximately 23% increase in petroleum prices since December
2004. An increment in petroleum prices leads to inventory gains and
translates into higher rupee margins. After freezing oil prices for
almost seven months, the government finally decided to lift the cap in
mid-December in order to recoup its budgetary losses. International
crude prices have considerably mounted on the back of global
demand-supply imbalances with the price outlook going forward
PSO's nine months (July-March 2005) earnings
depicted a 43% increase to Rs4.31 billion as compared to Rs3.02
billion during the corresponding period of last year. The company has
announced Rs5/share dividend taking the cumulative cash payout to
Rs16/share. The rise in profitability is attributable to the combined
effect of higher petroleum prices, rebound in fuel oil demand and
higher market share in white oil products.
PSO has succeeded in increasing its sales volume by
37% over the same period last year. The gross margins improved by
47bps on the back of rising POL prices during the quarter. The sales
volume of White Oil increased by 4% and Black Oil by 69% compared to
last year. Mogas and HSD volumes grew by 9% and 5% respectively as
more customers were attracted towards Fleet and Corporate Cards.
Presently, PSO is focusing on retail automation,
which is progressing very well. During the nine months of the current
fiscal year, PSO added over 100 New Vision outlets bringing the total
to around 1100. Furthermore, CNG facility was installed at 25 new
outlets, taking the aggregate to 130 CNG stations owned by the PSO.
OGDCL's July-March 2005 earnings were in the region
of Rs25.38 billion, 53% higher as compared to Rs16.59 billion last
year. The earnings growth is to result from the dual impact of higher
oil prices and increased energy output. During first half of the
current fiscal, OGDCL's earnings were up 62% to Rs15.78 billion as
against Rs9.73 billion last year. The company claims that production
from the Qadirpur field has boosted OGDCL's gas output. The increase
in the company's oil production has mainly resulted from the Chanda
and Bobi fields. OGDCL's ongoing exploration activities depicted by
enhanced crude oil and gas production and development of new fields is
to bring significant fruit to the company. Petroleum prices during
most of the last two years have maintained a rising trend ensuing from
OPEC production cuts, low US inventories, turmoil in the Middle East
and speculative interest by hedge funds. At the same time, the upward
trend in gas well-head prices (that follow the international crude
trend) is to enormously contribute to the profitability surge.
Going forward, OGDCL's earnings growth prospects
are to be fuelled on the momentum of new discoveries. Enhanced
production during FY05 will also result from the completion of Dhodak
Plant Enhancement and Dakhni Expansion Projects.
Pakistan Petroleum Limited's July-March 2005
earnings estimated around at Rs6.32 billion which is to mark a
considerable YoY growth. PPL's profitability growth is to result from
the combined effect of surge in gas production and higher gas prices.
The gas prices for PPL's two main fields, Sui and Kandhkot are revised
every six months and follow the crude oil price trend. Gas well-head
prices have mounted ensuing from the buoyant global oil price trend.
PPL's gas production during FY05 has been boosted
on the back of higher output from the company's joint venture gas
fields. During the half-year ended December 2004, the company's sales
volume of natural gas was up approx. 7% to 155,662MMcf.
PPL's earnings for the half-year ended December
2004 amounted to Rs4.05 billion, 47% higher. The company has also
announced Rs2.5/share interim cash dividend.
Regarding PPL's exploration activities, the company
is a working interest owner in 14 exploration blocs of which 8
(including 2 offshore blocs) are company operated and the remaining 6
are partner operated.