Aug 27 - Sep 02, 2007

In recent years, Pakistan has witnessed sharp increase in demand of natural gas. Total production of natural gas during the year 2005-06 was 3.8 billion cubic feet per day. Currently, the country produces natural gas to the level of 4.2 billion cubic feet per day, but still it is not fully meeting the present demand mainly that of industrial and power sectors. Pakistan had proven reserves of natural gas to the level of over 52 trillion cubic feet (tcf), whereas gas over 25 tcf has already been produced and consumed.

The projected demand-supply position of natural gas indicates a deficit of 25% of total gas requirement by 2010, as additional gas from indigenous existing wells will add, in coming years, only to the level of 10% to the current production. Gas import pipeline projects are planned, nonetheless their implementation will take much longer period, given the present conditions, and imported gas being available in foreseeable future is a remote possibility.


Power sector is major consumer of natural gas, with almost 40% share in total national consumption. In addition to the existing thermal power plants, a number of new IPP (independent power producer) projects have been sanctioned recently, based on natural gas as primary fuel, with cumulative capacity of about 2,400 MW (mega watt). In total about 800 million cubic feet per day (mmcfd) gas has been earmarked for a few of these projects, initially until 2010-11, in addition to the projects based on dedicated gas-fields.

Due to limitations of resources however, natural gas is not committed for these power projects on year-round basis, as it is not made available during 2-3 months of winter season. For this reason these power plants have to resort to using alternate or back-up fuel for this period, depending on the technology applied for power generation. Generally, these are distillate (light) fuel oils, such as high-speed diesel (HSD), and residual (heavy) fuel oils, including low sulfur furnace oil (LSFO) and high sulfur furnace oil (HSFO). Gas is not committed to the remaining projects, and as such these are planned as dual-fuel (gas-oil) based power projects.

Consumption of petroleum products by power sector at present is 16 million tons, and is rapidly increasing. Nonetheless, dual-fuel (gas-oil) fired power plants consume significant part of this figure. The up-coming gas-based/dual-fuel power projects in private sector will further strain on demand for petroleum products to sustain their operations during winter when gas is not made available to these plants.


In view of increasing cost of petroleum products globally and also Pakistan's persistent high import bill of oil, it is imperative to consider other economical options of burning other alternate or back-up oil fuel for power generation for dual-fuel power projects. Petroleum Naphtha, commonly known as naphtha, has the potential to be considered suitable in replacing the above liquid oil fuels, due to naphtha being indigenous and comparatively of lower price. A few of the IPPs operating in Pakistan are currently exploring the possibility of using naphtha as an alternate/back-up oil fuel.

Naphtha is primarily used as feedstock in refineries and chemical/ petrochemical industries. The least expensive of oil fuels, it is also used world over successfully for power generation, either as primary fuel or alternate fuel to natural gas. Leading world manufacturers of gas turbines and diesel/gas engines have installed, in recent years, a number of simple-cycle and combined-cycle units using naphtha as fuel for power generation in many countries, including the USA, China and India.


India, which has at present total installed power generation capacity of 115,545 MW, has the world's largest experience of using naphtha on gas turbines. Since 1998 India is operating 360-MW capacity Kayamkulam (Kerala) combined cycle plant having installed two naphtha-fired GE 9001E gas turbines. Expansion of the power plant is currently in progress, to add 3x650 MW power generation capacity, which is scheduled to go on stream in 2009. Likewise, Tanirbavi (Mangalore) 220 MW combined cycle power plant based on naphtha had commenced operations in 2000-2001. GE/Alstom have established this barge-mounted plant. Another power plant, 655 MW capacity at Paguthan, Gujarat is based on natural gas as main fuel and naphtha as alternate, and produces electricity since 1998, using three Siemens V94.2 gas turbines.

Among many other Naphtha-based combined cycle power plants in India, operating on gas turbines, the major projects are: 826-MW at Ratnagiri, Maharashtra, 220-MW capacity at Peddapuram, Andhra Pradesh and 173-MW at Kochi, Kerala. A 330-MW combined cycle power plant at Pillaiperumalnallur, Tamil Nadu uses natural gas as primary fuel and naphtha as back-up fuel. Conventional gas turbines, fired with naphtha fuel, are 132 MW at Jamnagar, Gujarat and 124 MW at Chennai, Tamil Nadu, to quote only a few installations.


Current naphtha production in Pakistan, as a by-product from the petroleum refineries, is around 873,000 tons per annum. There is however sharp increase registered in naphtha output as a result of refinery expansions in recent years, and it may potentially emerge as an alternate/backup oil fuel. The current naphtha production is enough to run at least six combined-cycle power plants of 100-MW capacity each, it is roughly estimated, for a period of approximately two months when supply of natural gas would not be ensured. At present, only at one refinery the naphtha production is converted into high-octane gasoline, whereas all other refineries export the low-valued commodity, earning annually an amount of around US$ 200 million at current optimum market price, which is insignificant.

Here, one recalls with despondency that Pakistan's hydro-cracker/naphtha-cracker project, originally approved by the government in 1982, could not see light of the day, having incurred millions of dollars and consuming valuable time period. In 1990s an UAE- based company had joined hands with the government of Pakistan to establish joint venture, but it lacked professional seriousness and financial credibility to finalize and implement the agreement. The plan was shelved, but if it had established, the plant would have fully utilized indigenous naphtha thereby converting it into value-added products for domestic and export markets.


Naphtha, a colorless, volatile and inflammable liquid hydrocarbon mixture, has varying composition of different grades. Petroleum Naphtha, which is the unprocessed component in the production of petrol/motor gasoline, is intermediate distillate between the lighter gasoline and heavier benzene. It has a specific gravity of 0.76. Naphtha is also converted into motor spirits. Transfer, transportation and storage of naphtha may pose problems. Its very low viscosity results in poor lubrication to metal surfaces, and therefore lubricity improvement additives are used for naphtha-fuelled power generation facilities.

Naphtha requires special safety considerations for use in gas turbines and diesel/gas engines. Its high volatility can cause fire explosions, as in case of other liquid fuels, though only one major accident is reported. In July 1996, a fire explosion occurred in Enron's Telside (UK) power station, which is 1,875 MW capacity--perhaps the world's largest gas-fired combined cycle heat and power plant. This was due to ignition of naphtha leak from a joint during fuel changeover. Since then the related technology has further improved, and more effective protection systems and safety management are in place.

As regards environmental concerns, nitrogen oxide emissions burning naphtha are almost of the same levels as that for combustion of other heavy fuel oils, and the impact is effectively mitigated, by installing separators, bringing the same to acceptable and regulatory levels. In fact, centrifugal liquid fuel treatment systems are installed, which significantly improves the quality of fuel before it enters gas turbine or diesel/gas engine, as the case may be.


At present there is no pricing mechanism for naphtha in Pakistan since it is not being sold in domestic market, except for one refinery supplying to fertilizer industry. Based on the current selling price to fertilizer plant, naphtha would be available to the IPPs at Rs 40,000-50,000 per ton, or Rs 30 per liter including duties and taxes. The optimum price of naphtha was recorded in Europe as US$ 648 per ton in June this year. It is thus estimated that naphtha fuel component of power plant operation would be much lower in comparison to burning, for example, diesel (HSD) that currently costs Rs 36-38 per liter. Practically there is no increase in cost of machinery and equipment, and hence the capital cost of power plant, in case of naphtha-fuelled combustion instead of other oil fuels. Thus, using naphtha would significantly reduce power generation costs and resultantly electricity tariffs.

In view of the foregoing, Ministry of Petroleum and Natural Resources need to undertake, on an emergent basis, a detailed feasibility study to establish use of naphtha as an alternate/backup oil fuel for gas-based power projects. Based on technical and economic conclusions, the government should plan to promote preferential use of naphtha compared to other liquid fuels, thereby extending policy initiatives to the IPPs, existing as well as new entrants.

(The writer is Member of the Board of Directors, Private Power and Infrastructure Board, Ministry of Water and Power, Government of Pakistan)