Fertiliser sector facing gas shortage

Islamabad—Pak-Arab Fertilisers company Multan and other units of the fertiliser sector are currently facing gas shortage of around 200MMCFD. According to a report, the fertiliser sector consumes 15 percent of country’s whole natural gas while the existing gas shortage of 25 percent or 200MMCFD may not end in near future, however, it will be reduced to 15 percent in the next two years after additional gas of 400-450mmcfd.

However, in short-term the situation would remain crucial with 35 percent gas shortage in Sui network (unless government allocates additional gas from other sectors) while plants on Mari network would face 15 percent gas shortage. Experts said that in this scenario the local manufacturers including fertiliser plants of Engro and Fatima will continue to raise Urea prices to avoid production losses.

According to the figures, Pakistan’s gas distribution network is divided among three companies namely SNGPL, SSGC and Mari Gas with market share of 46 percent, 29 percent and 15 percent, respectively. In addition, there are few E&P companies which directly supply gas to power sector with a market share of 10 percent. Over the last 3-years (FY09-FY11), total gas supply from Sui-network (SNGPL & SSGC) remained stagnant around 2,600MMCFD while gas supplies from Mari have increased by an average 3 percent to 504MMCFD.

Mari Gas is the biggest supplier of gas to fertilisers with a lion share of 70 percent followed by SNGPL (19 percent) and SSGC (11 percent). During the ongoing FY11, average gas supply from Sui network to fertiliser stood at an average 177MMCFD (down 11 percent). This is estimated to be 35 percent lower than actual demand of more than 300MMCFD in Sui network.

This is inclusive of additional demand from Engro’s new 1.3m tons Urea plant having long-term contract with SNGPL. In case government restores full gas to Engro’s new plant (at the expense of other sectors), gas shortage may reduce to 20 percent. On the other hand, average gas supply from Mari Gas network to fertiliser sector remained flat at 400mmcfd.

This is despite additional gas supply to Fatima Fertiliser and thus facing gas shortage of 15 percent given actual demand of approximately 493MMCFD. Experts said that Mari-fed fertiliser units, which include, Engro’s old plant, FFC and Fatima will continue to face an average 15 percent gas curtailment. This is despite the fact that company’s gas production has increased by 10 percent to 550MMCFD in May 2011.

An energy expert said in a report that he expects Sui network to bring additional gas of 400-450MMCFD chiefly from KP-TYA, Sinjhoro and Uch, with small contributions from other fields as well. This would likely to reduce overall country’s gas shortage to 15 percent as compared to current shortage of 25 percent.