Fuel price reform boosts Oman Oil marketing firms' revenues despite slip in sales volumes

The government's move to deregulate fuel prices has boosted the revenues of oil marketing companies in Oman

04 August 2016
Muscat - The government's move to deregulate fuel prices has boosted the revenues of oil marketing companies in the sultanate. 

However, according to the firms, the decrease in product demand since the beginning of the year has hurt sales volumes.

The combined revenue of Oman's three oil marketing companies - Oman Oil Marketing (Omanoil), Shell Oman Marketing and Al Maha Petroleum Products - jumped by RO48mn, or nine per cent, to RO569.1mn in the first half of 2016 against RO521.4mn in the same period last year.

Following the removal of fuel subsidies in mid-January, retail sales volumes have been impacted, the companies said in their financial reports disclosed to the Muscat Securities Market.

Al Maha Petroleum said its first-half earnings came in at RO4.5mn (Muscat Daily)

Omanoil reported sales revenue of RO199.4mn for the first half of 2016 compared with RO182.9mn in the same period last year. This boosted its revenues by nine per cent. The company's net profit dropped nine per cent to RO5mn from RO5.5mn.

"With the removal of fuel subsidies," Omanoil said in its company report, "the retail business segment witnessed a notional drop in sustainable sales volumes during the first half of 2016."

Nevertheless, Omanoil said it continues with its retail network expansion strategy with the introduction of five new filling stations in 2016 and more to be opened during the second half of the year.

Shell Oman's first half revenue surged 10.7 per cent to RO183.4mn from RO165.6mn in the same period of the previous year. The company reported a net profit of RO8.8mn for the six months ended June 30, 2016, up 28 per cent on year. The company said profit growth was driven by a significant non-recurring item earlier in the year, coupled with business growth from investments and efficient cost management.

"The retail business saw changes in the fuel demand pattern across the country in line with the trend in the industry and as influenced by the changes in the fuel price structure," Shell Oman said in its directors' report.

Shell Oman said it continued with the long-term strategy of investing in its retail network and enhancing the customer experience with new retail station, convenience service projects in progress.

The first-half sales revenue of Al Maha Petroleum increased eight per cent to RO186.3mn from RO172.9mn a year ago. "The increase is mainly on account of the increase in domestic fuel prices despite the drop in sales volume attributed to the drop in product demand in the retail business segment," Al Maha Petroleum said in its report.

Al Maha Petroleum's net profit came in at RO4.5mn for the first half of 2016 against RO5.2mn in the same period of 2015, marking a decrease of 13 per cent, which the company said is mainly due to the increase in operating and administrative expenses.

The company said it opened four new filling stations during the first half of 2016 and another four filling stations are in various stages of construction.

© Muscat Daily 2016

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