On behalf of the Board of Directors, I am pleased to welcome you all to the 46th Annual General Meeting of your Company to present the company's Annual Report for the year ended June 30, 2006.

The year under review witnessed rising trend of petroleum prices internationally. The crude and product prices flared up to new heights due to persistent supply constraints in Nigeria and concerns on gasoline stocks in USA. Arab light Crude which constitutes bulk of your refinery's crude recipe, averaged to USD 58.5/bbl during 2005-06, thereby recording an increase of 42% in comparison with last year. Similar trend was observed in the product prices with Kero/Jet prices averaging to USD 72.9/bbl, up by 32.7% from last year and HSD prices recording an increase of 35%.

Global topping/refining margins however, remained depressed this year as compared to 2004-05. Asian refining margins fell in the red zone in November 2005 and remained very thin until their recovery in March 2006 on account of strong Furnace Oil demand from China and Korea.

Despite devastating earthquake which brought huge humanitarian and economic setback, the Country posted a GDP growth of 6.6% during fiscal year 2005-06. However, trade deficit of the Country soared and current account deficit increased, primarily due to high oil prices. The Country recorded marginal growth of 1.4% during current year in its consumption of Petroleum products. Consumption of Motor Gasoline declined by 11% in comparison to last year as usage of cheaper fuel 'CNG' continued to grow in the automobile sector, which may affect the capacity utilization of the refinery.

The refinery operated at its full capacity during the year. The Company was able to increase its Naptha exports by 13% in comparison to last year as local demand of Motor Gasoline registered marked decrease. Production and supply of upgraded jet fuel JP-8 was commenced during the year. I am pleased to inform you that despite the odds of depressed international refining margins and decline in the local demand of HSD & Motor Gasoline, your Company managed to earn robust after tax profit of Rs 1.34 billion during current year. The reserves of the Company have touched a new height of Rs 4.3 billion as at June 30, 2006.

This year was a landmark in the HSE&Q Management as your Company achieved an all time high record of 10 Million Man-Hours without Lost Time Injury. In addition, the Company also received "ACCA-WWF Best Environment Reporting Award 2005" for the second year in succession, on account of its transparent and comprehensive environmental reporting.

I would like to assure you that the management is fully conscious of challenges ahead in the industry. The Board has approved an investment plan for the upgrade of the refinery. The up gradation plan will help the refinery in meeting the future product specification and will also sustain future profitable operations of the refinery. The additional units include Deisel Hydrotreater, Visbreaker, Hydrogen Generating Plant, Deasphalting unit, Sulphur Recovery unit, Amino Treatment unit and Vacuum Distillation.

The results of the year could not have been achieved without the devotion, hard work and commitment of all employees of the Company. On behalf of the Board, I would like to express my gratitude to our valued customers and the staff of Pakistan Refinery.