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LNG disruptions via Strait of Hormuz hit Petronet LNG, GAIL, Indian Oil and Bharat Petroleum, halving urea output.
Urea production at affected facilities has dropped by about half. AI-generated image used for representational purposes only
India’s urea manufacturing units have scaled back operations significantly after disruptions in LNG supplies passing through the Strait of Hormuz, triggered by force majeure declarations linked to escalating tensions in West Asia. Many facilities are now operating at roughly half capacity.
Petronet LNG Ltd, which runs the country’s largest LNG receiving terminal, declared force majeure after upstream suppliers said they could not deliver contracted volumes due to shipping disruptions linked to the conflict involving the US, Israel and Iran. The development led state-run distributors — GAIL (India) Ltd, Indian Oil Corporation and Bharat Petroleum Corporation Ltd — to reduce gas supplies provided under RasGas agreements to fertiliser plants nationwide.
“Gas supplies have been curtailed to approximately 60-65 per cent of normal levels,” a senior industry official told news agency PTInoting that when scheduled maintenance shutdowns in recent months were factored in, effective supply at certain units had fallen below 50 per cent.
As a result, urea production at affected facilities has dropped by about half. At the same time, plant officials said energy use has increased significantly, by as much as 40 per cent, because large ammonia-urea units lose efficiency when forced to run below optimal capacity.
“Plants of this scale are not designed to ramp up and down at will,” one plant operations manager said. “Operating under these conditions means you are burning more energy to produce less fertiliser, and that is a direct financial hit.”
Industry officials also pointed to operational challenges, saying gas consumption directives have sometimes arrived late at night after Ras Laffan LNG Company invoked force majeure, leaving plant teams scrambling to adjust output.
“Sudden load variations of this nature are not practically feasible for large train-based ammonia-urea plants,” another industry source said. “They risk equipment failures, plant tripping and, most critically, safety risks to operating personnel.”
Meanwhile, producers are also dealing with pricing uncertainty after GAIL informed fertiliser companies that long-term RLNG supplies would be billed using multiple price benchmarks starting March 1, 2026, the PTI report mentioned. Despite the disruption, India’s urea stock stood at 61.14 lakh tonnes as of March 19, higher than the 55.22 lakh tonnes recorded a year earlier, though analysts warn prolonged supply issues could affect availability ahead of the kharif sowing season.
March 22, 2026, 2:01 PM IST
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