Mari Energies (MARI) has announced the approval of gas allocation from its Ghazij/Shawal discoveries in the Mari field at well-head gas prices notified by OGRA (i.e., Petroleum Policy 2012 prices). The gas will be transported to consumers through Sui companies’ network under the Third-Party Access (TPA) rules 201,8 with applicable wheeling charges, in our view.
Under the revised allocation, the flows from MARI from HRL, Ghazij/Shawal, Deep, and SML/SUL will increase to 1054mmcfd from the current direct allocation of ~850-900mmcfd over the next 2-3 years, following the development of the required infrastructure. This is a whopping 180 mmcfd increase. Until these developments are completed, the gas supply will remain as is.
In our forecast earlier, we had assumed cumulative flows from HRL, Ghazij/Shawal, Deep, and SML/SUL in FY27-28 at around ~875mmcfd, which now has the potential to go up to 1054mmcfd as per an official Ministry of Energy document.
It is also important to understand that in 2025, all fertilizer plants were operating at their full capacity, indicating that gas supply was at optimal/required levels. FatimaFert (Sheikhupura plant), Agritech, and FFC (PQ) were previously supplied through Sui companies. Of these, FatimaFert and Agritech were supplied RLNG, while FFC (PQ) is receiving gas from multiple fields via SSGC. This suggests that the recent deferment of RLNG cargoes will directly benefit MARI, as it will substitute for the RLNG volumes with Ghazij/Shawal flows.
Since Mari fields produce low-BTU gas, certain CAPEX will be required to convert this gas into pipeline-quality gas, which, in our view, will be borne by the beneficiary companies.
Based on our estimates, if MARI volumes increase by 100 mmcfd, it will result in an earnings impact of Rs 13.5 per share, which is 25-29% of FY26/27 earnings. With incremental volumes of 180 mmcfd, this impact would be Rs 24.1 per share (or 40-50%). To highlight, all the incremental gas volumes are assumed at PP-12 rates.
Oil and Gas Exploration Sector – MARI to emerge as a major beneficiary: In our view, MARI remains the biggest beneficiary of this development, as the company will now have direct access to its fertilizer consumers, bypassing Sui companies, which were sometimes creating cashflow issues as well. In addition, as mentioned in the previous slide, the company will also be able to ramp up its production from Ghazij/Shawal to over 200 mmcfd, bringing total volumes from Mari’s different formations to over 1050 mmcfd.
The sector was also likely to benefit from reduced RLNG imports, which were replaced by increased domestic production. In this scenario, we believe a large portion of the RLNG volumes will be taken by MARI. Also, the current supply to the FFC (PQ) plant is sourced from different fields, which may also reduce the off-take from other E&P companies going forward, in our view.
Fertilizer Sector – Gas supply secured: Unlike the past, when the Government used to approve subsidized gas for Agritech and FatimaFert, the gas allocation to these companies now been made permanent. The EFERT allocation has also been increased from 26 mmcfd to 105 mmcfd from the HRL reservoir, as the company previously relied on swing volumes and will now receive fixed gas for its base plant. We believe this development is neutral for the fertilizer sector, albeit their gas supply will be certain.
Furthermore, with certainty in the gas supply, urea production will reach an optimal level of 6.7-6.8 million tons (as in 2025), with demand of 6.7 million tons (2025). The average production between 2020 and 2023 was 6.26 million tons.
Sui Companies: The removal of captive consumers from Sui companies is already resulting in an increase in UFG, as either captives’ volumes are curtailed or partly diverted to retail consumers, who are prone to UFG. In either case, UFG rises in % terms. However, we are yet to see whether the allocation to these plants was for natural gas or RLNG. We await further clarity on this from Sui companies.
