Fertilizer industry warns of food insecurity caused by gas diversions

Recently, the Cabinet Committee on Energy (CCoE) announced their decision to divert natural gas to pipeline system from Mari Gas. The decision was opposed by the fertilizer industry as it believes it a grave threat to the country’s food security and agriculture sector. 

According to the Fertiliser Manufacturers of Pakistan Advisory Council (FMPAC) “the decision of the CCoE, whereby gas is being provided from the Mari Gas fields to the network through a new interconnection, is a grave threat to the country’s food security in the long term since this would not only hasten the depletion of indigenous resources but also put at risk the billions of dollars of investment.”

The Council, in a series of letters sent to ministers of national food security, industries, and production, planning and development, and energy, has maintained that the decision exposes those who are associated with the industry either indirectly or directly to potential unemployment and thus, it warned against the decision and requested the CCoE to reconsider their decision.  

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On 26 November 2020, the CCoE decided to add 50 million cubic feet per day of natural gas from Mari Field to the Sui Northern Gas Pipelines Ltd (SNGPL) system in January. It also ensured developing a compression facility on SNGPL’s field by Mari Petroleum to guarantee continuity of supply. 

Mari Field’s Habib Rahi Limestone (HRL) reservoir was a medium heating value gas with Co2 and nitrogen, stated FMPAC. Although the contents are important for urea fertilizer production especially for facilities designated for such purposes, however, it has a negative effect on the quality of power plants. The Fertiliser Policy of 2001 had also acknowledged using this gas as a fuel as uneconomical. 

A section of the gas was given to Guddu Power Plant previously by the government, which was not an efficient decision keeping in view the plant’s low efficiency. 

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“Now the supply to SNGPL is contradictory to the stated policies of GOP and counterproductive for the long-term assurance of our national food security,” read the letter. Only 2 percent will be fulfilled out of the country’s total natural gas requirement from HRL and the fertilizer sector’s 20 percent of the natural gas requirement will gradually weaken in the future, it added.

“While the impact of this diversion of domestic gas to the SNGPL network may not have visible effects in short term, it definitely threatens the national food security and billions of rupees of loss in taxes due to the early closure of the domestic industry,” the letter warned.

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Natural gas is an important content of Pakistan’s energy mix however, it does not produce many value-added products. Its utilization in the domestic sector, power plants, and industries have also been debated by the fertilizer industry. This is the reason why local fertilizer production has been given so much importance by the previous governments.

The only industry that utilizes natural gas significantly for value-added purposes is the fertilizer industry which guarantees an important source of food security. A stable agriculture sector adds a lot to a country’s economy and employment sector. FMPAC argues that “food insecurity is anticipated to reach nearly 60pc country-wide in 2030 if positive steps are not taken to enhance domestic production of food commodities.” For this very reason, domestic fertilizer production is imperative, argues the fertilizer industry. 

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