oil and gas

Oil marketing firms’ profits hit hard by virus

March 7, 2021

Oman’s all three oil marketing companies – Oman Oil Marketing Company (OOMCO), Shell Oman Marketing Company and Al Maha Petroleum Products Marketing Company – have reported sharp declines in their profits for 2020, mainly due to the COVID-19 pandemic which caused a major slump in fuel consumption and demand.

The sultanate’s largest oil marketing company OOMCO’s net profit for the year ended December 31, 2020 fell 83 per cent to RO957,000 compared to RO5.62mn net profit reported in the previous year. The company’s group turnover dropped more than 24 per cent to RO442.39mn in 2020 against RO583.51mn recorded in 2019.

The closure of many commercial activities, lockdowns and movement restrictions to curb the spread of the virus last year resulted in a dramatic reduction in sales volume of petrol, diesel and aviation fuel in Oman.

‘The COVID-19 pandemic and associated consumer behaviour have negatively impacted the economic activity, thereby resulting in lower demand for fuel products and services,’ OOMCO said in its yearly report submitted to the Muscat Securities Market (MSM). The company said it is closely monitoring the situation to manage the potential business disruption on its operations, financial performance and will take appropriate required actions.

OOMCO said its retail business continued to exhibit growth in 2020 as the company added eight new service stations. The aviation fuel business, OOMCO said, was deeply affected by the closure of the Muscat International Airport from March 2020 till October 2020.

Shell Oman reported a 76.5 per cent drop in net profit for the year ended December 31, 2020 at RO2.58mn compared to RO10.98mn earned in the previous year. The company’s sales revenue dropped by 30 per cent to RO367.09mn in 2020 against RO524.82mn in 2019.

‘2020 was a year of unprecedented challenges driven by decline in oil prices and the COVID-19 pandemic. This translated into a sharp decline in demand largely resulting from decreased business activity and restrictions imposed to reduce the spread of the disease,’ Shell Oman said in its yearly report.

Much of the uncertainty of 2020, Shell Oman said, is expected to continue into 2021, with the speed of economic recovery, both domestically and globally, remaining unclear.

Al Maha Petroleum also posted a 75 per cent fall in 2020 net profit at RO863,000 compared to RO3.4mn reported in 2019. The company’s sales revenue during the year 2020 dropped by 28 per cent to RO333.8mn from RO465.9mn in the previous year.

‘The decline in sales is mainly attributed to the reduction in economic activities and fall in demand due to the strict measures introduced by the government to contain the pandemic,’ Al Maha Petroleum said in its yearly report.

In light of the economic impact of the COVID-19 pandemic and sharp declines in profitability, the boards of directors of all three oil marketing firms – OOMCO, Shell Oman and Al Maha Petroleum – have proposed not to distribute any dividend for the year 2020.

muscatdaily

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