Pakistan’s oil demand is expected to rise 7 percent year on year basis to 21 million mt in the fiscal year ending on June 30, 2014, led by a closure of compressed natural gas stations and a resolution of the circular debt problem, according to Karachi-based analysts.
Over the last eight years, oil products demand has risen an average 4-5 percent per year, but the growth rate is expected at 7 percent this year, Farhan Mehmood, head of research at Karachi-based Brokerage House Sherman Securities, said on Monday.
Pakistan consumed 8.9 million mt of oil products over July-November, up 10 percent from 8.1 million mt in the same period of 2012, according to data from the Oil Companies Advisory Committee.
“We believe a resolution to the circular debt, resulting in higher power generation and improving industrial activity in the country, are the main factors behind the growth,” Vahaj Ahmed, research analyst at Karachi-based brokerage house Topline Securities, said on Monday.
Fuel oil and high speed diesel demand, which account for 78 percent of total oil demand in the country increased by 15 percent and 8 percent to 4.1 million mt and 2.9 million mt, respectively, over July-November this year, Ahmed said, adding that total oil demand could surpass 21 million mt.
The Pakistan’s finance ministry has forecast the economy to grow more than 4 percent in the current fiscal year from an average growth rate of 3 percent in the last five years.
Mehmood said a combination of CNG pump closures and a rise in two-wheeler sales has boosted demand for gasoline in Pakistan.
“Petrol sales are climbing and will increase to 3.7-3.8 million mt in the current fiscal year,” he said.
This would be up 13.4 percent from sales of 3.35 million mt in 2012-13, when sales surged 21 percent year on year, according to data from the OCAC.
A rising shortfall in natural gas production has forced the government to ration supplies to CNG pumps and divert them for household and industrial use, which has boosted gasoline demand, Mehmood said.
Moreover, the production of two-wheelers rose to 1.6 million units in 2012-13, from around 250,000 units in 2003-04. Two-wheelers account for about 55 percent of the country’s total petrol consumption.
Pakistan’s petroleum products imports over July-November rose 9.6 percent year on year to 5.8 million mt, while crude oil imports increased 3.7 percent to 3.1 million mt, the OCAC data showed.
