Indigenous gas supply to industry may boost urea output, export

LAHORE: Misplaced priorities have not only deprived Pakistan of achieving urea sufficiency on sustainable basis but also curbed export potential of even modest quantity, industry officials said on Tuesday.

As per an industry estimate, the country can fetch about $100 million to $150 million annually from export of 300,000 to 400,000 tons if the government ensure availability of low-quality, locally produced gas for operating idle manufacturing capacity.

The local urea production has been volatile in the country because of multiple factors. Pakistan urea manufacturing was badly affected during 2009 to 2014 period because of downward trend in supply of gas to fertiliser plants. However, urea production picked up in 2015 after augmentation of gas supplies with better management of available energy resources. Hence, the indigenous gas based annual urea manufacturing volume reached to around 5.65 million tons during last five years (2014-2018) from 4.64 million tons average yearly manufacturing recorded during previous five years (2009-2013).

Unlike incessant burning of gas molecules, conversion of natural gas into urea has been considered a viable and energy efficient option which needs to be given priority while allocating natural gas to various sectors. The enhanced urea manufacturing in turn will augment much-needed exports while manufacturing sector will also spur economic growth.

Besides, the diversion of gas to fertiliser plants will balance short-surplus supplies of natural gas by rationalising volumes in glut situation. Moreover, the local urea industry, having five-decades of strong footings, can become more competitive while aligning itself along the latest trends after being part of global urea market.

An industry official shared that availability of urea for meeting local demand on sustainable basis could be possible by provision of indigenous gas to run idle capacity. Referring to first option, he added, instead of spending significant annual outlay of nearly Rs40 billion on provision of subsidised regasified liquefied natural gas (RLNG) to certain fertiliser plants, local market can be adequately supplied with farm nutrient as the fertiliser industry has the capacity to supply over 6.1 million tons of urea per annum through indigenous gas against a demand of 5.8 million. Consequently, unnecessary dual financial burden of imports in terms of both dollar outflows and additional subsidy can also be avoided for goods.

Talking about availability of low-quality gas for fertiliser production, industry official said Pakistan Petroleum Limited currently has 250mmscfd gas allocated to Guddu from Kandkot gas field.

Upto 50mmscfd of this gas is unutilised due to non-utilisation of gas by Guddu. Moreover, 110mmscfd gas from Mari is allocated to Guddu Power plant which is very inefficient. This can be directed to idle urea capacity in the country for its much more efficient utilisation.

In addition to this option, industry official maintained, pipeline-quality natural gas is available in surplus quantities in lean demand of summer. “We have sufficient gas available in the months of July-September which even forces government to shut several gas fields for avoiding system collapse this year. It highlights need to better allocate gas as and when available. Fertiliser plants can manufacture urea from this gas to meet local yearly requirement,” an industry official observed.

Being primarily an agrarian state, the growth of country is heavily dependent on the fertiliser industry. Historically, Pakistan’s urea demand has remained higher than its supply.

However, since, 2015-16, the country’s urea manufacturing industry’s installed capacity has surpassed the local demand. But, it still yet to produce fertiliser optimally due to misplaced priorities in allocation of gas.

When contacted, Nadeem Babar, special assistant to Prime Minister on petroleum said available natural gas is being used on priority basis for meeting energy requirement of various sectors. He however expressed willingness to explore every option for utilizing available quantum of gas for various sectors including fertiliser industry.