Kolkata: Within a couple of days of Qatar halting production, and therefore supply, of LNG, or liquefied natural gas, after missiles hit its gas fields, fertilizer manufacturers in the most populous country on earth has started feeling the pinch. Indian fertiliser manufacturers have started trimming output after Qatar stopped delivery of the key feedstock, said reports.
A record 314.07 lakh tons of urea was manufactured in India in FY24. It is the most critical and widely used nitrogenous fertiliser in Indian agriculture. Urea is used in the cultivation of rice, wheat, maize, cotton and various vegetables.
India has long-term LNG contracts with Qatar for a large share of its gas needs. LNG is the basic feedstock for the production of urea. LNG is used both as an ingredient as well as a source of energy in the manufacture of this critical fertiliser. Reports have also quoted officials who think that prolonged shutdown of the gas fields in Qatar can also lead to a shutdown of manufacturing units in India. Already a few units such as Indian Farmers Fertiliser Cooperative have started cutting down output in certain urea plants.
No current shortage
Reports state that despite the red flags on Qatar, there is no immediate shortage in gas supplies, an official in India’s fertiliser ministry said. He however, did not refer to the cuts in urea production. There are sufficient stockpiles to meet the demand for the near-term, Suresh Kumar Chaudhari, director general of Fertiliser Association of India, told the media. He also said that they are optimistic that the war may end soon and supplies may be resumed. “If the war continues, it will be matter of concern for us,” Chaudhari said. If the urea production cuts linger, the country might have to resort to expensive imports of the fertiliser before the peak demand during monsoon, which begins in June. Expensive fertiliser import can upset important parameters such as current account deficits.
City gas service
The LNG disruption has hit city gas distributors such as Mahanagar Gas too. It can adversely impact industrial customers that are heavily dependent on imported gas. This can also affect their sales. India is the world’s fourth largest LNG importer. Qatar and UAE account for more than 55% of total LNG supply to India.
Force majeure invoked
After it halted production, QatarEnergy served a force majeure notice to Petronet LNG, one of the biggest importers of LNG in India. “In light of the recent and ongoing war in the Middle East region involving Iran and Israel, vessels are presently unable to safely transit through the Strait of Hormuz to reach Ras Laffan, the loading port of QatarEnergy,” Petronet said in a statement.