South Korea Shows interest in Urea Import from Pakistan

South Korea has shown interest in importing urea from Pakistan sinceSouth Korean urea supplies have been impacted due to recent limitation on export of urea and other fertilizers from China. A delegation of Engro Fertilizers Limited was called by the South Korean Embassy to discuss the possible opportunity of export of urea to South Korea. Pakistan has significant potential to export urea and earn valuable foreign currency for the country.

After the meeting with the Ambassador – Mr. Suh Sangpyo and Counsellor (DCM) – Mr. June Seo Park, Imran Ahmed (CFO – Engro Fertilizers Limited) briefed the media on these significant discussions. Mr. Imran Ahmed highlighted that Pakistan was a net importer of urea till 2012 as the domestic manufacturers faced capacity constraints to meet the country’s high urea demand. However, the Fertilizer Policy 2001 incentivized the local industry to invest around Rs 162 billion in new plants and capacity expansions. As a result, the domestic production capacity increased by approximately 2 million tons and helped Pakistan not only to attain self-sufficiency in urea but has also created excess capacity which may earn precious foreign exchange for the country.

He further explained that with domestic urea demand of hovering around 6-6.2 million tons, the fertilizer industry has an idle capacity of 800,000 tons on an annual basis. If granted permission by the government, the industry can start making exports within 30 days, which will create additional jobs and result in significant foreign exchange inflows of over USD 700 million on current spot basis.

Whilst Pakistan faces a severe gas shortage, the urea manufacturers utilize low quality (low British Thermal Unit – BTU) gas for which adequate gas reserves for the next decade and beyond are available. Moreover, with the right government support, untapped reserves of low BTU gas in the country can be put to use to earn the much- needed foreign exchange for the country. The requirement of urea in South Korea, coupled with unutilized capacity of Pakistan, may create a possibility to develop a long-term sustainable export opportunity for the country.

The domestic fertilizer industry has enabled USD 3 billion import substitution for the country during this year. After achieving self-sufficiency for the domestic demand, the industry is now geared to generate significant exports from untapped low BTU indigenous gas resources.