Fertiliser companies â€کstruggle' even to get naphtha

Vol 11, PW 15 (29 Nov 07) Midstream & Downstream

Fertiliser manufacturers are finding it increasingly difficult to source naphtha, faced with a continuing drought in the supply of spot R-LNG from Dahej and Hazira.

“Earlier we were struggling to get gas,â€‌ Dr. S.

Nand, technical director of the Fertiliser Association of India, tells PETROWATCH. “But now we are struggling even to get naphtha.

â€‌ Blame good weather over the past three years, record crops and a growing population for this prolonged spurt in demand from farmers across the country for urea, the primary fertiliser used in India. Last year the Fertiliser Association of India, an umbrella body of fertiliser manufacturers across the country, measured urea demand at 25m tonnes.

This year it expects the figure to rise to 26.5m. Most of India’s fertiliser manufacturers are producing at full or over capacity in response to soaring demand – but still not enough.

India’s domestic urea production was 20m t/y in the last financial year. By the end of this financial year (April 2008) it will jump to over 21.5m t/y.

With increased production of urea, comes increased demand for fuel: R-LNG, or if that’s not available, naphtha. “R-LNG supplies have dried up,â€‌ adds Dr.

Nand. “In the old days fertiliser companies used domestic gas from ONGC but when these supplies began depleting they turned to R-LNG to make up the shortfall.

But now all new supplies of R-LNG from Dahej are going to Dabhol.â€‌ Faced with unprecedented tight R-LNG conditions, fertiliser companies are returning to naphtha in ever increasing numbers.

In the last financial year the Fertiliser Association of India estimates the sector used a total of 2.3m tonnes of naphtha. By the end of this financial year it expects the figure to exceed 3m tonnes.

“Use of naphtha among fertiliser companies is returning to levels seen before 2004,â€‌ adds Dr Nand. “In those days the sector was using 3.5m tonnes per annum.

Only after 2004 when R-LNG became available did the figure start to come down.â€‌