Shams ul Nisa

National Refinery Limited (NRL), a key player in Pakistan’s oil refining sector, has navigated market challenges by strategically transitioning to a lighter crude mix, reports WealthPk.

As a result, the company has enhanced its Gross Refining Margins (GRM), strengthening its financial performance despite rising costs and industry-wide pressures. In the second quarter of FY25, NRL adjusted its crude mix by increasing the use of lighter crude, enabling higher output of premium products like diesel while reducing low-margin furnace oil production. Hence, this transition strengthens the company’s capacity to cater to the growing demand for premium petroleum products in local and global markets.

During the 2QFY25, NRL saw an increase in sales volumes, driven by higher demand for diesel and motor spirit (MS), despite challenges from smuggled fuel and high stock levels. Additionally, the company improved its fuel segment utilization, showcasing its operational efficiency and adaptability to market conditions. Hence, NRL’s strategic measures have helped reduce losses amid ongoing challenges such as rising utility costs and regulatory uncertainties.

The company cut its operating loss for the 2QFY25 to Rs1.6 billion, a notable improvement from Rs6.7 billion in the previous quarter. The company reported a revenue of Rs185.6 billion. Despite posting a higher loss of Rs11.73 billion in 1HFY25 compared to Rs4.65 billion last year, NRL’s improving refining margins and a 13% increase in local lube base oil sales signal a path toward recovery.

Moreover, with challenges like smuggled fuel, high stock levels, and fluctuating crude prices in Pakistan’s oil refining sector, NRL has taken strategic steps to mitigate these pressures. To address inventory constraints from port congestion, the company exported surplus furnace oil after December 31, aiming to ease financial strain in the coming months.

dditionally, NRL secured a three-year medium-term loan with a one-year grace period to bolster working capital and maintain operational stability. Therefore, the company is also actively engaging with the Ministry of Energy and OGRA to address regulatory hurdles impacting its refinery upgrade projects under Pakistan’s Oil Refining Policy.

Furthermore, NRL is focused on sustainability and modernization as part of its long-term growth strategy. The company is advancing refinery upgrades under Pakistan’s Oil Refining Policy for Brownfield Refineries, aiming to improve energy efficiency and environmental compliance.

Additionally, NRL is refining its crude mix strategy to align with global shifts toward cleaner fuels and high-value products, ensuring greater competitiveness and sustainability in the evolving energy market. Hence, NRL remains optimistic about sustaining its recovery as refining margins strengthen and regulatory challenges are addressed. The expected decline in interest rates will further ease financial pressures by lowering financing costs.

NRL’s ability to navigate market challenges highlights its resilience and commitment to forward-thinking leadership in Pakistan’s refining industry. Thus, NRL is well-positioned to navigate industry challenges, create value for shareholders, and contribute to the growth of Pakistan’s energy sector with a focus on strategic initiatives and operational efficiency.

Credit: INP-WealthPk