SHELL PAKISTAN LIMITED

S.KAMAL HAYDER KAZMI,
(feedback@pgeconomist.com)
Research Analyst
, PAGE
July 12 - 18, 2010

Shell Pakistan Limited (SPL) is a Pakistan-based company engaged in the marketing of petroleum and compressed natural gas. It also blends and markets various kinds of lubricating oils. The company has investments in two non-trading subsidiaries, namely Shell Pakistan Provident Trust (Private) Limited and Shell Pakistan Pensions Trust (Private) Limited. The company introduced Shell Helix Ultra, Shell Helix CNG Super, and restored its quick oil change service as Shell Helix Oil Change Plus.

FINANCIAL PERFORMANCE

During the period the company earned a profit after tax of Rs2.56 billion. In the same period last year, the company has incurred a loss of Rs1.73 billion. This encouraging turnaround is primarily on account of improved business performance, better product margins, focused cost management and favourable movement in the international prices of oil during the year.

FINANCIAL PERFORMANCE (RS MILLION)

INDICATORS 2009 2008
Sales volume (tonnes) 2,481,547 2649,266
Sales revenue 177,110 184,147
Profit/(Loss) before taxation 3,910 (3,049)
Profit/(Loss) after taxation 2,563 (1,726)
New capital expenditure 1,325 1,024
Shareholders' equity 8,271 6,256
Dividend 2,260 -
Earning/(Loss) per share 37.42 (25.20)

The Shell Pakistan has managed to bring down its liabilities considerably in the previous year. However, despite this significant achievement, government's receivables continue to be a major challenge and the company has still approximately Rs4.5 billion bills, comprising of price differential claims and sales tax/petroleum development levy (PDL) refunds. These are being followed up vigorously with concerned government authorities.

PRODUCTS

Shell has long been the leading supplier of outstanding products and services to a range of different industries. The company provides full range of oils, greases, and additional services to their customers. Shell makes and sells more than 3,000 different lubricants to meet customer needs.

FUELS

Shell has been developing fuels for over 100 years. This experience makes the company a leading provider of innovative and new fuels today. Shell diesel with fuel economy formula is especially designed to give extra miles at no extra cost to their customers.

CRUDE OIL

The balance recoverable reserves of crude oil in the country as at 1st January 2010 have been estimated at 303.63 million barrels. The average crude oil production during July-March 2009-10 was 65,246 barrels per day as against 66,531 barrels per day during the corresponding period of last year, showing a decrease of 1.9 per cent. During the period under review, 27,659 barrels per day were produced in northern region and 37,586 barrels per day in southern region, as against 26,888 barrels and 39,643 barrels produced per day respectively in the same period last year. During July-March 2009-10, production crude oil has increased by 2.9 per cent from northern region whereas productions decreased in southern region by 5.2 per cent.

OIL MARKETING COMPANIES

Pakistan's average crude oil production during July-March 2009-10 was 65,246 barrels per day as against 66,531 barrels per day during the corresponding period of last year, showing a decrease of 1.9 per cent.

PRICES OF OIL PRODUCTS

PRODUCTS

JP-1 JP-4 JP-8 PREMIUM MOTOR GASOLINE HOBC LIGHT DIESEL OIL
May-2010 58.46 55.54 61.24 75.08 89.19 65.76
June-2010 55.36 52.63 58.21 69.04 82.04 62.61

The ministry of petroleum and natural resources has planned to make the oil refineries and oil marketing companies (OMCs) richer by placing an upper cap on import price for locally produced petrol sale price while deregulating its ex-refinery price at the cost of consumers in new oil pricing mechanism.

The ministry has accepted that ex-refinery price of petrol would increase in the range of Rs3-4 per liter in respect of refineries including NRL, PRL and ARL. OMCs are already seeking price differential claims (PDCs) from the ministry of petroleum since imports are more expensive than refinery price.

FUTURE OUTLOOK

The economy has shown signs of improvement with reduction in inflation and stabilisation of the exchange rate. The government has also paid 80 billion rupees to the energy sector in order to resolve the problem of circular debt and has made a commitment to do more which also bodes well for the profitability of the energy sector. The profitability of the industry players is correlated with the international oil prices.

Since, oil prices have declined in the international market from the record high of $147/barrel in July 2008 to less than $75 in June 2010, due to lower demand witnessed in the Asian markets. The profitability of the company will depend on future economic conditions, GDP growth and inflation apart from the fluctuations in the international crude oil prices. Shell Pakistan is divided into 8 functional areas i.e. Retail, Lubricants, Aviation, Operations, Finance, Corporate, Human Resource and Commercial Fuels. It has played a leading role in abridging the growing energy demand gap in Pakistan. We are represented in all aspects of the upstream and downstream oil business in Pakistan - in exploration both onshore and offshore, in refining, as well as a 26% share holding in the white oil pipeline.

Currently Shell in Pakistan is headed by Mr. Zaiviji Ismail bin Abdullah, Chairman and Managing Director of Shell Pakistan Limited (SPL) and Chairman of Shell Companies in Pakistan.

Shell has over 100 years of experience in developing the technology and services that make us a leading provider of innovative and new fuels today. We were the first to introduce retail visual identity on its forecourts. We strive to meet and exceed customer expectations by delivering the best fuels and service to our customers at every site, every visit, everyday. With a dynamic portfolio and a fast-growing retail network, the Shell Brand is the most preferred brand amongst motorists across Pakistan.

Shell has always placed great importance on the health, safety and environment aspect of the society it does business in. Safety is one of our top priorities, and we base our policies on the belief that all accidents are preventable.

Over the last decade, SPL has developed a robust programme of social investment, which supports organizations and initiatives in the areas of health, education, welfare, community development, heritage and environment.

In an increasingly competitive business environment, we at Shell Pakistan strive ever harder to maintain operational excellence. We strengthen standardized and simplified business processes and systems, and ensure top quality, right quantity and superior service to all customers across the country.

Shell Pakistan is divided into 8 functional areas i.e. Retail, Lubricants, Aviation, Operations, Finance, Corporate, Human Resource and Commercial Fuels. It has played a leading role in abridging the growing energy demand gap in Pakistan. We are represented in all aspects of the upstream and downstream oil business in Pakistan - in exploration both onshore and offshore, in refining, as well as a 26% share holding in the white oil pipeline.

Currently Shell in Pakistan is headed by Mr. Zaiviji Ismail bin Abdullah, Chairman and Managing Director of Shell Pakistan Limited (SPL) and Chairman of Shell Companies in Pakistan.

Shell has over 100 years of experience in developing the technology and services that make us a leading provider of innovative and new fuels today. We were the first to introduce retail visual identity on its forecourts. We strive to meet and exceed customer expectations by delivering the best fuels and service to our customers at every site, every visit, everyday. With a dynamic portfolio and a fast-growing retail network, the Shell Brand is the most preferred brand amongst motorists across Pakistan.

Shell has always placed great importance on the health, safety and environment aspect of the society it does business in. Safety is one of our top priorities, and we base our policies on the belief that all accidents are preventable.

Over the last decade, SPL has developed a robust programme of social investment, which supports organizations and initiatives in the areas of health, education, welfare, community development, heritage and environment.

In an increasingly competitive business environment, we at Shell Pakistan strive ever harder to maintain operational excellence. We strengthen standardized and simplified business processes and systems, and ensure top quality, right quantity and superior service to all customers across the country.

Shell Pakistan is divided into 8 functional areas i.e. Retail, Lubricants, Aviation, Operations, Finance, Corporate, Human Resource and Commercial Fuels. It has played a leading role in abridging the growing energy demand gap in Pakistan. We are represented in all aspects of the upstream and downstream oil business in Pakistan - in exploration both onshore and offshore, in refining, as well as a 26% share holding in the white oil pipeline.

Currently Shell in Pakistan is headed by Mr. Zaiviji Ismail bin Abdullah, Chairman and Managing Director of Shell Pakistan Limited (SPL) and Chairman of Shell Companies in Pakistan.

Shell has over 100 years of experience in developing the technology and services that make us a leading provider of innovative and new fuels today. We were the first to introduce retail visual identity on its forecourts. We strive to meet and exceed customer expectations by delivering the best fuels and service to our customers at every site, every visit, everyday. With a dynamic portfolio and a fast-growing retail network, the Shell Brand is the most preferred brand amongst motorists across Pakistan.

Shell has always placed great importance on the health, safety and environment aspect of the society it does business in. Safety is one of our top priorities, and we base our policies on the belief that all accidents are preventable.

Over the last decade, SPL has developed a robust programme of social investment, which supports organizations and initiatives in the areas of health, education, welfare, community development, heritage and environment.

In an increasingly competitive business environment, we at Shell Pakistan strive ever harder to maintain operational excellence. We strengthen standardized and simplified business processes and systems, and ensure top quality, right quantity and superior service to all customers across the country.