ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved supply of indigenous gas to three fertilizer plants, already cleared by a Committee headed by Deputy Prime Minister, Ishaq Dar, sources told Newzshewz.
The ECC presided over by Finance Minister, also approved gas allocation to Engro old plant and SNGPL through de-alocation of 110 mmcfd from Guddu power plant.
Sharing the details, Petroleum Division informed ECC that Mari Energies Limited (Mari Energies) is the operator of Mari Gas field, which is located in district Ghotki, Sindh. Mari Energies is producing and supplying gas from four gas reservoirs which are vertically stacked in the geological formations of the field (i) Habib Rahi Limestone (HRL), (ii) Sui Upper Limestone (SUL) / Sui Main Limestone (SML) (iii) Ghazij / Shawal and (iv) Goru-B Deep.
The ECC on December 28, 2016 while considering a summary of the Petroleum Division allowed Mari Energies to supply unutilized gas volumes of HRL reservoir, which become available due to operational exigencies arising from time to time, to its existing consumers with preference to the fertilizer sector. Pursuant to this authorization, Mari Energies has been supplying unutilized gas of GENCO-II to Engro
Fertilizer Ltd (Old/Base Plant on Mari network). It is highlighted that 110 mmcfd gas allocation made to GENCO-II in year 2016 from Mari field’s HRL reservoir has witnessed a consistent erratic gas off-take. In addition, gas supply term sheet agreed between two sides has also expired in February, 2020. Mari Energies stuck-up receivables amounting to Rs. 82 billion as of 30.06.2025 (including Rs. 16.1 billion for GDS, Rs. 18.7 billion for take-or-pay claims and Rs. 47.2 billion of interest on late payment) are yet to be realized from GENCO-II.
Most of units of GENCO-II have outlived their useful lives and Cabinet Committee on Energy (CCE) in 2021 has already advised Power Division for decommissioning and delicensing of the inefficient units in phased manner except for the units of 747 MW CCPP which is on active privatization list. Currently GENCO-II has allocation of upto 250 mmcfd gas from Pakistan Petroleum Ltd’s Kandhkot gas field which has naturally depleted to 150 mmcfd and is sufficient to meet demand of 747 MW units. Pursuant to the discussions held in the meeting with Power Division on June 12, 2025 chaired by the Minister for Petroleum Division on the issue of privatization of GENCO-II, it was agreed that Power Division was ok with firm off-take of gas volume from Kandhkot only. Accordingly, Power Division has sought gas allocation of upto 138 mmcfd along with a separate Gas Sale Agreement (GSA) for the 747 MW Guddu Power Plant.
The sources said, considering the requirement of urea in the country, in 2018, Ministry of Industries and Production (MoI&P) with the approval of ECC, decided to provide subsidized RLNG to M/s Fatimafert Limited and Agritech Ltd at a capped RLNG price. The tariff differential was picked up by the Government as a budgeted subsidy of Rs. 33 billion in FY22. Similarly, for FY23 and FY24, the cumulative subsidy was budgeted as Rs. 41 billion for both years. Both the plants remained operational till 3rd January 2023 on subsidized RLNG. Thereafter, considering the request of MoI&P to meet urea shortages, both the plants were made operational against supply of indigenous gas from March to October, 2023 at SNGPL’s prescribed price.
In November, 2023, ECC decided that both the fertilizer plants would be supplied RLNG at indigenous gas tariff and the tariff differential of RLNG price would be recovered through monthly RLNG pricing as a cross subsidy. OGRA in May, 2024 allowed the recovery of tariff differential at US$ 0.57/mmbtu from ring-fenced RLNG consumers. However, the recovery of tariff differential in RLNG pricing is not equal to actual RLNG cost, therefore, SNGPL continued to witness delayed recovery and thus leading to less / delayed payments to PSO/PLL.
Fauji Fertilizer Ltd’s Bin Qasim plant (FFC(PQ) at Karachi produces DAP and urea and has allocation of 68 mmcfd from SSGCL on “as and when available basis”.
The term of FFC(PQ)’s Gas Supply Agreement with SSGCL is set to expire in December, 2025 and would require decision for supply of gas post expiry of its allocation and GSA.
Except for above stated three (3) fertilizer plants on Sui companies’ network namely Fatima Fert, Agritech and FFC(PQ), the other seven plants have gas supply arrangements from Mari field valid until year 2029 i.e., Engro Fertilizer Ltd (Enven) has trilateral arrangements with Mari Energies and SNGPL while 3 plants of FFC,2 plants of Fatima Group and Engro’s old/base plant have bilateral gas supply arrangements with Mari Energies. In order to ensure continuation of supplies, affordable urea/DAP production in the country with the objective to save Forex on fertilizer imports, the Fertilizer Manufacturers of Pakistan Advisory Council (FMPAC) suggested indigenous gas allocation for these three plants from Mari field. The proposal was discussed at length in consultation with the supplier i.e., Mari Energies and it was agreed that without changing the existing gas allocations to various customers of Mari Energies, gas to above-mentioned three plants would be provided from Mari’s new reservoirs Ghazij / Shawal which has potential to meet the demand.
However, it is important to note that currently, gas upto 48 mmcfd from Ghazij /Shawal is being produced and the same is allocated to SNGPL under extended well testing.
Foregoing in view, Petroleum Division has proposed following arrangements for gas allocation and supply to fertilizer plants.
Gas allocation from new Ghazij/Shawal off-spec/raw gas discoveries may be considered in following manner: (i) FFC ( Port Qasim, raw gas allocation 104 mmcfd, processed gas supply 80 mmcfd ;(ii) Fatimafert ( Sheikhupura ) 68 mmcfd raw gas and 52 mmcfd processed ; and (iii) Agritech( Daudhkhel ) 50 mmcfd raw gas and 38 mmcfd processed gas.
The raw gas from Ghazij/Shawal will be delivered within Mari gas field (delivery point). The respective fertilizer customers shall install facilities for gas processing and compression, for injection and transportation of gas in Sui companies’ network to their respective plant sites. The estimated investment to process low BTU gas with high CO2 content is estimated at over USD 200 million. The gas price at delivery point shall be equal to the applicable wellhead price as notified by OGRA from time to time.
The respective fertilizer customers shall enter into bilateral gas sale and purchase agreements (GSAs) with MariEnergies. The respective fertilizer customers shall also enter into third party access arrangements with Sui companies for transportation of processed gas to their respective plant sites, under Third Party Access (TPA) Rules, 2018 and the Pakistan Gas Network Code. In case of supply of gas to FFC(PQ), SNGPL and SSGC shall make gas swap arrangements as SSGCL network is not available around Mari gas field.
Upto 110 mmcfd gas from HRL allocated to GENCO-II be de-allocated. Upto 105 mmcfd be allocated to Engro Fertilizer’s base Plant on Mari. Out of the entire gas allocation of 105 mmcfd, the HRL gas volumes entitled to PP-2012 (over and above current allocation) gas price shall be priced as per the Petroleum Policy 2012 both for feed and fuel stock.
MariEnergies shall have the flexibility to supply any volume that becomes available from any of the above reservoir(s) to any of its customer(s) including SNGPL/SSGCL, as “swing volume” on “as and when available basis” at the applicable gas price as notified by OGRA from time to time. Further, in case gas reserves from HRL reservoir feeding most of the fertilizer plants starts natural depletion, then, in such eventuality, MariEnergies may be allowed to backfill the depleted gas volumes of its existing consumers out of Ghazij/Shawal reservoir.
The gas sale price for fertilizer consumers, as notified by OGRA, shall not be less than the applicable wellhead gas price to avoid any eventuality of a negative gas development surcharge (GDS), under all circumstances.
Currently Ghazij / Shawal reservoir is producing only 48 mmcfd which is allocated to SNGPL under EWT arrangements. Reportedly, the full potential supply from Ghazij/Shawal shall be available in 24 months as per Mari Energies Ltd, till such time, the current production of 48 mmcfd may be equally allocated to FatimaFert and Agritech Ltd as per the applicable wellhead price. The balance allocated to SINGPL under cw arrangements. Reportedly, the full potential supply from Ghazij/Shawal shall be available in 24 months as per Mari Energies Ltd, till such time, the current production of 48 mmcfd may be equally allocated to Fatima Fert and Agritech Ltd as per the applicable wellhead price. The balance of gas volumes may continue to be supplied from backfill (HRL reservoir). No further subsidized RLNG would be provided to both plants beyond October 30, 2025 unless required for network stability. SNGPL has been compensated through injection of gas volumes upto 70 mmcfd from Mari Energies Shewa gas field which is currently being curtailed due to line-pack issues (the existing allocation to remain as is).
As per proposal since actualization of full potential of Ghazij / Shawal will take time, the present gas supply arrangement between FFC(PQ) and SSGCL may be continued till finalization of gas supply arrangements from Ghazij for FFC(PQ) as per proposed allocation on as and when available basis.
Allocation of upto 110 mmcfd gas to SNGPL from Mari Deep approved by ECC in 2021 has expired in June, 2024, same may be regularized and re-allocated to SNGPL until expiry of the Mari Lease to meet deficit in demand on SNGPL. Ends
