After Restaurants, Urea Producers Face Shut Downs Due To War-Induced LNG Crunch

After restaurants and hotels, urea manufacturers in India have started to face the heat of the United States-Israel-Iran war which has disrupted natural gas supplies to India, the world’s fifth largest importer of the energy commodity.

Some leading urea manufacturers in India have shut down their plants or advanced routine upkeep as shortage of natural gas hits production, according to a report by The Economic Times.

India’s biggest urea producer, Indian Farmers Fertiliser Cooperative Limited, is among the firms affected due to the short supply, the report said.

Even if LNG (liquified natural gas) supplies to these companies get restored, it may take up to a month to start the production plants again.

LNG is the primary feedstock for the production of urea, which is the world’s most widely used fertiliser. According to the sources cited in the report, the fertiliser industry of the country was running at 70 percent of the LNG supply than required.

India is the biggest importer of urea. Urea prices in international markets may post a steep rise as the country will need to increase its purchases from outside if the LNG supply crunch extends further and domestic production gets affected.

India is the world’s largest producer and exporter of rice and the second largest producer of wheat, cotton and sugar.

The government has taken measures to ensure that at least 70 percent of the average LNG needs of fertiliser makers are met while the Middle East conflict snarls supply, the report cited a spokesperson of the fertiliser ministry as saying.

Since the start of the Iran war in late February, supplies of oil and gas have halted from the Gulf region, sending energy prices to record highs.

While Indian energy suppliers like Gail and Gujarat State Petroleum Corporation have tried to pick LNG through the spot market, the tenders have gone unawarded due to the short supply.

According to the Fertiliser Association of India, the country’s fertiliser sector relies heavily on LNG imports, with a significant share sourced from the Middle East. The industry is working with the government to prioritise allocations for urea output, the group added.