Urea Plants Operate At Half Capacity as Gas Shortages Bite India

India's urea manufacturing plants are operating at approximately half their normal capacity due to severe disruptions in liquefied natural gas (LNG) supplies triggered by escalating tensions in the Middle East, particularly involving the ongoing conflict and restrictions in the Strait of Hormuz. Multiple reports from March 22, 2026, indicate that force majeure declarations by suppliers, combined with halted or reduced LNG flows from key exporters like Qatar, have cut gas availability to fertilizer producers to around 70% or less of requirements. This has forced several plants to curtail output, advance scheduled maintenance, or partially shut down operations, directly impacting domestic urea production critical for the agricultural sector.

The fertilizer industry, which relies on natural gas as the primary feedstock for ammonia-urea production, consumes a significant portion of India's gas supply. All 32 ammonia-urea plants in the country are gas-based, sourcing from domestic providers and imported regasified LNG through entities like GAIL. Qatar, accounting for roughly 44% of India's LNG imports, has seen major supply interruptions amid the regional crisis, leading companies such as Indian Farmers Fertiliser Cooperative Ltd. (IFFCO) and others—including international players like Yara—to reduce ammonia and urea output. Government efforts to prioritize supplies have helped maintain about 70% of average needs, but prolonged constraints risk further reductions ahead of the Kharif planting season starting in June.

This domestic squeeze compounds global fertilizer market pressures, where the Middle East accounts for nearly half of traded urea exports and a substantial share passes through the Strait of Hormuz. Disruptions have already driven urea prices higher worldwide, with some estimates showing surges of 30-40% in recent weeks. India, the world's largest urea importer despite strong domestic capacity, has seen imports rise in recent years and now faces potential additional demand of up to 1 million tonnes if output halves for a month. To mitigate risks, officials have approached alternative sources like China to ease export restrictions and are monitoring stockpiles, which remain relatively healthy with year-on-year increases providing short-term buffer.

Also Read: Six Confirmed Dead After Qatari Helicopter Crashes in Territorial Waters

The situation highlights India's vulnerability to geopolitical events in energy chokepoints, as the conflict has ripple effects beyond oil to agriculture and food security. While no immediate nationwide shortage has been declared, experts warn that extended disruptions could raise production costs, inflate farmer inputs, and potentially affect crop yields if not addressed swiftly. The government continues to widen measures to boost domestic availability, including directing higher gas allocation to fertilizer plants where possible.

As the crisis unfolds, attention remains on diplomatic and logistical efforts to restore stable LNG flows and diversify supply chains. The episode underscores the interconnectedness of global energy, fertilizer markets, and India's agrarian economy, with implications for food prices and rural livelihoods if the Middle East tensions persist.

Also Read: Former JD(U) Leader KC Tyagi Set to Join Rashtriya Lok Dal Today