Karachi, January 17, 2022 (PPI-OT): Pakistan Oil and Gas: Refining margins to remain strong in near term!

After posting a strong end to CY21 where margins for gasoline/diesel increased to USD12.3/11.8/bbl for last fifteen days of Dec’21, increasing cases of Omicron globally imparted some pressure and refining margins for gasoline/diesel stood at USD7.4/8.3/bbl for first fifteen days of Jan’22.

Overall, refinery margins have seen a significant recovery during CY21 where margins for petrol increased from USD1.3/bbl at the start of the year to USD12.3/bbl towards the end while margins for diesel closed CY22 at USD11.8/bbl against USD2.52/bbl at the start of year.

HSFO margins continue to remain in negative where after posting a slight recovery towards the end of CY21, margins have again slipped after start of CY21 and stood at negative USD16.2/bbl for fist fifteen days of Jan’22 against USD10.8/bbl for last fifteen days of Dec’21.

Moving forward, we expect margins to continue the volatile path and given no indication of a stringent lockdown globally, supply side is going to dictate prices where recent discipline indicate that oil prices will sustain the current levels in near term hence margins are expected to reflect similar strength.

For local refiners, current scenario paints an encouraging picture where increasing gasoline and diesel spreads will enhance the overall GRMs given the downside for HSFO cracks seems limited from here.