Aug. 31 (Bloomberg) -- Pakistan State Oil Ltd., the nation’s biggest fuel retailer, said revenue may climb to 1 trillion rupees ($12 billion) by 2012 by increasing sales of bio-diesel and liquefied petroleum gas.

The company plans to open 200 retail outlets for LPG, a fuel used by cars and for heating at homes, by June, Managing Director Irfan K. Qureshi said in an interview in Islamabad. The company reported revenue of 719 billion rupees last fiscal year, driven by diesel and gasoline sales.

State Oil needs to diversify its earnings after reporting the first loss in 33 years, when it was formed. State Oil is investing in LPG and other fuels as Pakistan’s government tries to reduce its oil import bill, which accounts for about one fourth of overseas purchases.

“I am looking at diversification as a long-term strategy,” Qureshi said. “The company had gone into a slumber, it’s a sleeping giant and my game plan is to wake it up.”

Demand for fuels is set to rise as the economy rebounds from the slowest pace of growth in eight years. Finance Minister Shaukat Tarin expects the economy to grow 6 percent annually in five years, compared with 2 percent in the 12 months ended June 30.

Profit Return

State Oil has a 61 percent share in the country’s refined oil market and 81 percent in crude oil sales, according to its Web site.

The new product lines and inventory gains will help State Oil return to profit this fiscal year, Qureshi said in the interview Aug. 28. The company posted a loss of 6.69 billion rupees in the year ended June 30 as declining crude prices eroded the value of its inventory.

Pakistan State Oil sells diesel, fuel oil, jet fuel, lubricants and compressed natural gas through 3,612 outlets. Last week, the company avoided defaulting on payments for oil imports after it secured a 10 billion rupee loan from banks and the government gave it an additional 5 billion rupee cash-grant.

Pakistan State Oil shares rose 0.5 percent to 288.01 rupees at 12:40 p.m. local time on the Karachi Stock Exchange. The stock has doubled this year, compared with a 46 percent increase in the benchmark stock index of 100 shares.

The company is talking to two or three “top of the line” international companies for a joint venture for branding its lubricants, Qureshi said.

Shell Pakistan Ltd., a unit of Europe’s largest oil company, is the biggest retailer of lubricants used in automobiles and machines with 45 percent of the market.

“We want to be number 1 in lubricants sale, a position we lost two, three years ago,” Qureshi, 56, said.

To contact the reporters on this story: Khalid Qayum in Islamabad at kqayum@bloomberg.net; Khaleeq Ahmed in Islamabad at paknews@bloomberg.net.

Last Updated: August 31, 2009 03:32 EDT