ECC to allocate 68mmcfd gas to FatimaFert

Ibn-e-Ameer

Economic Coordination Committee (ECC) is set to allocate 68 mmcfd gas from Mari field to FatimaFert Plant to boost urea production.

Meanwhile, Fatimafert will switch from LNG to indigenous gas which will result in a saving of around Rs 3 billion per month subsidy.

MPCL has consented to allocate up to 68 MMCFD gas to FatimaFert with the proposal of gas pricing under Mari’s GPA price for a volume of 31 MMSCFD and 37 MMCFD prices under Petroleum Policy 2012.

The weighted average price of gas at the proposed pricing regimes comes out to be Rs. 773/mmbtu.

If the government offers this gas at notified prices for the fertilizer sector, the weighted average gas price comes out to be 578/nimbtu.

On top of this cost, Rs. 228/mmbtu would be third-party transportation charges which comprise SNGPL’s charges at Rs. 107/mmbtu.

Additionally, the other cost includes recovery of Fatima Group’s investment made on compression/dehydration & pipeline at Rs. 121/mmbtu.

FatimaFert is running at a low capacity

At times, the Fatimafert plan has operated at less than half of the available production capacity.

Due to it, the government has incurred an approximate subsidy of Rs. 21 billion over four years.

For round-the-year operations of the plant, Fatimafert Limited has come up with the proposal of firm allocation of up to 68 MMCFD of unutilized gas out of the currently allocated gas to Guddu Power Plant.

Check Out: ECC directs to shift AGL, Fatima Fertilizer Plants on system gas in a Month

The gas is from the Mari gas field’s shallow gas reservoir (Habib Rahi Limestone).

Against 68 MMCFD OF unutilized gas volume, SNGPL is currently using 50 MMCFD in its system.

This switchover of plant from RLNG to the indigenous gas source will likely result in a saving of a subsidy on RLNG supply i.e., up to Rs. 3 billion per month.

Since the plant is located at Sheikhupura-Punjab and the gas field is located at Daharki-Sindh, therefore, gas is required to be transported under a third-party access arrangement.

Fatima Group has already made an investment into a project in gas dehydration, compression and laying of a pipeline of 24 km pipeline from Mari field to the nearest SNGPL network.

This network has to carry a capacity of 110 MMCFD. The said pipeline currently carries up to 58 MMCFD for supply to M/s Pakarab Fertilizer Ltd at Multan and 50 MMCFD for supply to the SNGPL network.

Meanwhile, if Fatimafert does not produce urea, the government will require a subsidy of Rs. 53 billion per annum for the import of urea.

Furthermore, it will require Rs. 27 billion for operating the plant on RLNG at a capped price of Rs. 839/mmbtu.