The e ECC allows Mari Energies to supply unutilised gas volumes of the HRL reservoir to its existing consumers with preference to the fertiliser sector.
ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved the supply of indigenous gas to three fertiliser plants from Mari’s new reservoirs, Ghazij/ Shawal, whereas Engro’s fertilizer’s base plant on Mari will get gas from the SNGPL system by de-allocating to Guddu Power Plant.
Sharing the details, the Petroleum Division informed the ECC that Mari Energies Limited (Mari Energies) is the operator of the Mari Gas field, which is located in the district of Ghotki, Sindh.
Mari Energies is producing and supplying gas from four gas reservoirs, 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.
While considering a summary of the Petroleum Division on December 28, 2016, the ECC allowed Mari Energies to supply unutilised gas volumes of the HRL reservoir, which became available due to operational exigencies arising from time to time, to its existing consumers with preference to the fertiliser sector. Pursuant to this authorisation, Mari Energies has been supplying unutilised gas of GENCO-II to Engro Fertiliser Ltd (Old/Base Plant on Mari network). It is highlighted that 110 mmcfd gas allocation made to GENCO-II in the year 2016 from Mari field’s HRL reservoir has witnessed a consistent erratic gas off-take. In addition, the gas supply term sheet agreed between the 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 realised from GENCO-II.
Most of the units of GENCO-II have outlived their useful lives, and the Cabinet Committee on Energy (CCoE) in 2021 has already advised the Power Division for decommissioning and de-licensing of the inefficient units in a phased manner, except for the units of 747 MW CCPP, which is there on the privatisation list. Currently, GENCO-II has an allocation of up to 250 mmcfd gas from Pakistan Petroleum Ltd’s Kandhkot gas field, which has naturally depleted to 150 mmcfd and is sufficient to meet the demand of 747 MW units. Pursuant to the discussions held in the meeting with the Power Division on June 12, 2025, chaired by the Minister for Petroleum Division on the issue of privatisation of GENCO-II, it was agreed that the Power Division was ok with firm off-take of gas volume from Kandhkot only. Accordingly, the Power Division has sought gas allocation of up to 138 mmcfd along with a separate Gas Sale Agreement (GSA) for the 747MW Guddu Power Plant.
The sources said, considering the requirement of urea in the country, in 2018, the Ministry of Industries and Production (MoI&P), with the approval of ECC, decided to provide subsidised 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 subsidised RLNG. Thereafter, considering the request of MoI&P to meet urea shortages, both plants were made operational against the supply of indigenous gas from March to October 2023 at the SNGPL’s prescribed price.
In November 2023, the ECC decided that both the fertiliser plants would be supplied the RLNG at the indigenous gas tariff, and the tariff differential of the RLNG price would be recovered through monthly RLNG pricing as a cross-subsidy. The OGRA, in May 2024, allowed the recovery of tariff differential at USD 0.57/mmbtu from ring-fenced RLNG consumers. However, the recovery of tariff differential in RLNG pricing is not equal to actual RLNG cost, and that was why therefore, the SNGPL continued to witness delayed recovery and thus led to less/delayed payments to PSO/ PLL. Fauji Fertiliser Ltd’s Bin Qasim plant FFC (PQ) at Karachi produces DAP and urea and has an allocation of 68 mmcfd from SSGCL on “as and when available basis.”
The term of FFC (PQ)’s Gas Supply Agreement with the SSGCL is set to expire in December 2025 and would require a decision for the supply of gas post expiry of its allocation and GSA. Except for three fertiliser plants on Sui companies’ network, namely Fatimafert, Agritech, and FFC (PQ), the other seven plants have gas supply arrangements from Mari field valid until the year 2029; i.e., Engro Fertiliser Ltd (Enven) has trilateral arrangements with Mari Energies and SNGPL, while three plants of FFC, two plants of Fatima Group, and Engro’s old/ base plant have bilateral gas supply arrangements with Mari Energies. To ensure continuation of supplies, affordable urea/ DAP production in the country with an objective of saving forex on the fertiliser imports, the Fertiliser 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 three plants would be provided from Mari’s new reservoirs Ghazij/ Shawal, which have the potential to meet the demand. Currently, gas up to 48 mmcfd from Ghazij/ Shawal is being produced, and the same is allocated to the SNGPL under extended well testing.
The Petroleum Division proposed the 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 the 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 to the Mari gas field (delivery point). The respective fertiliser 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 the delivery point shall be equal to the applicable wellhead price as notified by the OGRA from time to time.
The respective fertiliser customers shall enter into bilateral gas sale and purchase agreements (GSAs) with Mari Energies. The respective fertiliser 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 the SSGCL network is not available around the Mari gas field.
Up to 110 mmcfd gas from HRL allocated to GENCO-II is be de-allocated. Up to 105 mmcfd be allocated to Engro Fertiliser’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 the current allocation) gas price shall be priced as per the Petroleum Policy 2012, both for feed and fuel stock.
Mari Energies 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 the SNGPL/ SSGCL, as “swing volume” on “as and when available basis” at the applicable gas price as notified by the OGRA from time to time. Further, in case gas reserves from the HRL reservoir feeding most of the fertiliser plants start natural depletion, then, in such an eventuality, Mari Energies may be allowed to backfill the depleted gas volumes of its existing consumers out of Ghazij/ Shawal reservoir.
The gas sale price for fertiliser 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 48mmcfd may be equally allocated to Fatimafert 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 subsidised RLNG would be provided to both plants beyond October 30, 2025, unless required for network stability. SNGPL has been compensated through the injection of gas volumes up to 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 actualisation of the full potential of Ghazij/ Shawal will take time, the present gas supply arrangement between FFC(PQ) and SSGCL may be continued till finalisation of gas supply arrangements from Ghazij for FFC(PQ) as per the proposed allocation on “as and when available basis.”
Allocation of up to 110 mmcfd gas to SNGPL from Mari Deep was approved by ECC in 2021, has expired in June 2024, and the same may be regularized and re-allocated to the SNGPL until the expiry of the Mari Lease to meet the deficit in demand on the SNGPL.
