India Urea Output Halved by LNG Disruption
Analysis based on 6 articles · First reported Mar 22, 2026 · Last updated Mar 22, 2026
The disruptions in LNG supply through the Strait of Hormuz, driven by West Asia tensions, have severely impacted India's urea production, leading to a 50% drop in output and increased energy consumption for fertilizer plants. This situation creates financial uncertainty for producers like Petronet LNG, India, Indian Oil Corporation, and Bharat Petroleum, and could affect fertilizer availability for India's upcoming kharif sowing season, potentially increasing agricultural costs and food inflation.
India's urea plants are operating at half capacity due to force majeure declarations that disrupted LNG flows through the Strait of Hormuz. This disruption stems from escalating tensions in West Asia, involving the United States, Israel, and Iran. Petronet LNG, India's largest LNG receiving terminal operator, declared force majeure after upstream suppliers were unable to deliver contracted volumes. This led to supply curtailments by state-owned gas distributors India, Indian Oil Corporation, and Bharat Petroleum, which supply gas to fertilizer units. Consequently, urea output has dropped by approximately 50%, while energy consumption at these plants has paradoxically increased by 40% due to reduced thermal efficiency at lower loads. Operational coordination has also suffered, with late communication of gas consumption mandates following Ras Laffan LNG Complex's force majeure invocation, posing risks of equipment failure and safety hazards. Furthermore, India introduced new, provisional pricing structures for long-term RLNG, adding financial uncertainty for producers. While India currently has sufficient urea stock, a prolonged shortfall could impact fertilizer availability ahead of the kharif sowing season.
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