India’s dual dependence on West Asia for urea production

The ongoing conflict in West Asia has disrupted global trade, leading to LPG shortages and a surge in crude oil prices. Data now indicate that the crisis could also affect India’s supply of Liquefied Natural Gas (LNG), putting at risk the production of urea, a key fertilizer in a majorly agrarian economy.

The country is heavily dependent on imports for its LNG supply, exposing many of its sectors to global shocks such as the U.S.-Israel attacks on Iran. Data show that in 2025, India bought more than 50% of its natural gas from the international market. In fact, India is the fourth largest buyer of natural gas in the world, with an imported supply of 261 lakh metric tonnes in 2025.

A majority of these imports — more than 40% of it — are tied to long-term contracts with suppliers in Qatar. This supply may be in jeopardy as Qatar’s LNG cargoes pass through the Strait of Hormuz, which has now become a central chokepoint in the Iran-Israel conflict. The UAE and Oman also ship LNG along this route, and both countries contribute to India’s imported LNG supply. Overall, more than 60% of India’s imported natural gas could be affected by these circumstances.

In India, natural gas is primarily used to produce ammonia, which is in turn used to produce fertilizers. In FY26, about 30% of India’s LNG supply was used for the production of fertilizers. Demand also comes from industry and gas-fired power and city gas networks which supply PNG (piped natural gas) to households and CNG (compressed natural gas) to vehicles. It has supplied more than half of India’s gas availability in recent years.

LNG is the main feedstock for the production of urea, which is the most widely used fertilizer in India. Many urea plants used naphtha or fuel oil — both derived from crude oil – as their main input. However, as urea production is a highly energy-intensive process, these plants have switched to natural gas, which produces fewer emissions.

National urea consumption hit 387 lakh metric tonnes in 2025, following a decade of steady growth. While domestic production has also been increasing, India produced about 306 lakh metric tonnes of urea in 2025, which does not cover the country’s demand. Due to this, India also relies on imports of urea.

Data indicate that the West Asian conflict threatens both domestic urea production and the stability of its supply chain. In 2025, India’s urea imports exceeded $2.3 billion, with a staggering 71% of these imports coming from West Asia. This total comprises 45% from Oman and a combined 26% from Saudi Arabia, Qatar, and the UAE, all of which rely on the Strait of Hormuz for transit.

In light of this scenario, the Government of India issued the Natural Gas (Supply Regulation) Order, 2026, officially including the fertilizer sector in its priority list. Under this mandate, fertilizer plants will be provided with at least 70% of their average natural gas consumption based on the last six months.

The Government also stated that as of March 10, India’s urea reserve has reached 61.51 lakh metric tonnes, about 10 lakh metric tonnes more than the stock recorded this time last year, ahead of the Kharif sowing season. However, only time can tell if India’s import dependence for both domestic production and global supply trade will weather the ongoing geopolitical instability, or succumb.

Source: Ministry of Trade and Commerce, Department of Fertilizers, International Gas Union