Mari Petroleum’s gas discovery bolsters Pakistan’s fertilizer industry

Mari Petroleum Company Limited (MPCL), a key player in Pakistan’s fertilizer industry, has announced a significant gas discovery at the Shewa-2 appraisal-cum-exploratory well in North Waziristan district, Khyber Pakhtunkhwa Province. This news, disclosed to the Pakistan Stock Exchange (PSX) on December 11, marks a major stride in the company’s aggressive three-year drilling campaign, which has so far yielded five discoveries from 15 exploratory wells out of 25 completed.

The Shewa-2 well, drilled to a depth of 4,577 meters by November 1, 2023, aimed to appraise the Lockhart and Hangu formations, previously identified at the Shewa1 well. It also sought to assess the hydrocarbon potential of the Samanasuk and Kawagarh formations. The Drill Stem Test in the Kawagarh formation, an exploratory target, showed a sustainable gas flow of 0.607 million standard cubic feet per day (MMSCFD) with a wellhead flowing pressure (WHFP) of 97 pounds per square inch (Psi) using a 32/64-inch choke size.

This discovery adds to the previously identified hydrocarbon-bearing reservoirs in Shewa-1, confirming the extension of hydrocarbon play in the Lockhart and Hangu formations. The Hangu formation exhibited a gas flow of 0.274 MMSCFD at a WHFP of 77 Psi, and the Lockhart formation, post-acid testing, revealed a flow rate of 51 MMSCFD and 391 barrels of condensate per day at a WHFP of 5,972 Psi with a 38/64-inch choke size.

Concurrently, the government has raised the gas sale prices for three fertilizer plants utilizing MPCL’s gas, aiming to align feed gas prices with industrial rates. The Oil and Gas Regulatory Authority (OGRA) has notified Engro Fertilizer Company Limited, Fauji Fertilizer Company Limited (Rahim Yar Khan), and Fatima Fertilizer Company Limited of the revised rates effective from October 1, 2023. This decision, coupled with the new discovery, might lead to an increase in urea prices, building on previous hikes, as anticipated by the market.

In Pakistan’s fertilizer landscape, ten plants exist, with six receiving dedicated supplies from Mari’s network. The Gas Supply Agreements for these six plants are set to expire in June 2024. This latest development by MPCL is poised to have significant implications for the country’s fertilizer industry and gas market dynamics.