Mari gas fields left with 10-year reserves; expeditious exploration urged

DAHARKI: Mari gas fields, the prime source of feedstock to a key fertiliser industry, are left with only 10 years of reserves, calling for expeditious exploration of new resources, a senior industry official said.

Asif Tajik, senior vice president of Engro Fertilizer said Mari gas fields initially had reserves of more than six trillion cubic feet, which has now come down to two trillion cubic feet, “which may last for another eight to 10 years”.

“Gas exploration is an ongoing activity and there are new gas discoveries as well,” Tajik said. “(But), the fertiliser industry feels that government should seriously look for gas explorations and other options for smooth supply of gas to urea manufacturing plants.”

Tajik was talking to media on a visit to Engro’s plant situated in Ghotki district, which is one of the top revenue generating regions in the province as it houses fertiliser plants that account for 90 percent of the total urea production in the country. There are also various gas-fired independent power producers with 600 megawatts of electricity generation.

Tajik said Fauji Fertilizer Company, Fatima Fertilizer and Engro Fertilizer produce approximately 5.2 million tons of urea from their plants, situated across 60-kilometer stretch. They are dependent on Mari gas to meet raw material requirements. The country’s annual urea production is 6.2 million tons.

Engro’s executive said urea fertiliser is so essential to enhance productivity of crops that if there is no urea half of the world’s population may not find enough food. Urea fertiliser is given special importance and priority by the governments across the world because it helps in ensuring food security.

On export of surplus urea that ended up in shortage last year, Tajik said the industry had huge inventory, which was difficult to store and handle, while there was also very little demand in the market. “That was a right decision which was taken from the perspective of inventory management.”

Engro’s official said the government allowed 100,000 tons of urea as some plants were shut down due to shortage of gas.

On re-gasified liquefied natural gas as an option for urea production, Tajik said imported gas is an expensive option nowadays, but the government has to decide whether it wants to subsidise RLNG for urea production or it wants to subsidise the imported urea, which is currently available at $280 a ton in the international market.

The official said local urea is available at around Rs1,600/bag, while imported urea costs approximately Rs2,600/bag.

Therefore, the government has to give a subsidy of approximately Rs1,000/bag. “If we produce urea locally we generate employment, taxes, duties and also contribute to the communities around us, but if we import urea we drain foreign exchange reserves and deprive exchequer of billions of rupees of taxes and duties that government earns each year.”

Engro Enven, the new plant of Engro Fertilizer, is running at over 95 percent of installed capacity. The plant is annually producing approximately 1.2 million tons of urea. Total annual production from Engro’s both the plants is around two million tons.