From zero to almost 693 million tonnes the rise in naphtha exports for 10M FY14 is phenomenal. However, this is not only due to improvement in the ongoing fiscal year, but mostly because of significantly low volumes during the previous year. In 10M FY13, the country’s export volumes of naphtha were zilch, while FY13 on the whole saw only 25 million tonnes of the same.
Naphtha is a byproduct of petroleum refining of crude oil. One reason for improved naphtha production and a surge in export volumes hinges on the oil and gas exploration and production firms producing more crude oil of late. And the more crude oil is produced, the more naphtha will be available by the refineries for export as there is an absence of naphtha cracking facility in the country.
An important factor in a rise in naphtha production is the improved efficiencies of refineries post circular debt resolution in July 2013. Though the refineries did not get bailout packages in the process, enhanced liquidity of the entire energy chain remained the key for refineries.
Since naphtha is exported, a lot depends on the scenario of the international demand and markets. Pakistan exports this light petroleum product in the Middle East, Far East and South Asia. Earlier this year, Organization of the Petroleum Exporting Countries (OPEC) had forecasted the demand for naphtha to expand faster than any other light products through 2020 due to rising requirement petrochemical industry in the developing Asian countries especially China.
Similarly, increased demand in India, Saudi Arabia and Middle East due to new paraxylene (PX) capacities is also a sign of improved international climate for naphtha. PX is produced by catalytic reforming of petroleum naphtha.
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