India Urea Plants at Half Capacity as West Asia Tensions Choke Gas Supplies
New Delhi, Mar 22 (PTI) India’s urea plants are operating at half capacity after force majeure declarations disrupted the flow of LNG in the Strait of Hormuz amid rising tensions in West Asia, industry sources said on Sunday. Sources said Petronet LNG Ltd, which operates India’s largest liquefied natural gas receiving terminal, declared force majeure after upstream suppliers said they were unable to deliver contracted volumes due to disruptions in cargoes passing through the Bosphorus.
The move led to supply disruptions by state-owned gas distributors GAIL (India) Ltd, Indian Oil Corporation Ltd (IOC) and Bharat Petroleum Corporation Ltd (BPCL), which supply gas under RasGas contracts to fertilizer units across the country.
“Gas supply has been curtailed to around 60-65 per cent of normal levels,” a senior industry official told PTI, adding that actual supply in some units had fallen below 50 per cent when planned plant maintenance in the last six months was factored in.
Urea production at the affected facilities dropped by approximately 50 percent as a result. Paradoxically, energy consumption at these facilities increased by up to 40 percent as large ammonia-urea trains operating at reduced loads suffered a sharp deterioration in thermal efficiency, according to plant officials.
“Facilities of this scale are not designed to move up and down on demand,” said one facility operations manager. “Working under these conditions means you burn more energy to produce less fertilizer, which is a direct financial hit.”
The situation was further exacerbated by what fertilizer company officials described as a breakdown in operational coordination. Following Ras Laffan LNG Company’s force majeure call, gas consumption instructions were occasionally transmitted to fertilizer units late at night, leaving plant managers scrambling to make sudden load adjustments.
“Sudden load changes of this nature are not practically possible for large train-based ammonia-urea plants,” another industry source said. “They risk equipment failures, plant tripping and, most importantly, safety risks for operating personnel.”
Sources said many plants had to exceed their gas allocations on an ad hoc basis to keep their operations within safe parameters.
Another complication has arisen on the pricing front. GAIL, in a letter dated March 15, informed fertilizer companies that long-term RLNG quantities will henceforth be billed at multiple price points, including contract price, GAIL Pool Price, and Gazetted Pool Price, starting March 1, 2026.
The unified price is temporary and subject to retroactive settlement under applicable government guidelines, introducing an additional layer of financial uncertainty for producers already absorbing production losses, sources said.
India is among the world’s largest consumers of urea and an ongoing domestic deficit could impact fertilizer availability ahead of the upcoming kharif sowing season, analysts said.
As of March 19, India’s total urea stock was 61.14 lakh tonnes, higher than 55.22 lakh tonnes in the same period the previous year.
