Oman’s OMIFCO to forge new path on end of Indian agreement

Author: Deepika Thapliyal

2020/07/01

LONDON (ICIS) – In India, the urea offtake agreement between the government and Oman India Fertiliser Company (OMIFCO) is unlikely to be extended beyond 14 July 2020, several sources confirmed exclusively to ICIS.

OMIFCO is expected to instead enter into contract agreements with traders for three years to sell around 150,000 tonnes/month or 1.7-1.8m tonnes/year of granular urea.

OMIFCO Oman Annual Offtake Contracts (TBC)
Buyer Quantity (tonnes)
Ameropa 1m
Yara 400,000
Swiss Singapore 300,000

Further details are awaited and an official announcement is still awaited.

Most of the tonnes are likely to be offered in upcoming Indian tenders, while the offtakers are also expected to move material to Latin America, US and other markets that take Arab Gulf material.

The pricing of the tonnes is likely to be on a formula basis.

The Indian government had signed a long-term offtake agreement with OMIFCO on 14 July 2005 to lift its entire production in the first 15 years of its operation.

Commercial production at OMIFCO commenced on 14 July 2005.

The nameplate capacity of the plant is 1.65m tonnes/year but it usually produces around 2m tonnes/year of granular urea. OMIFCO plans to increase its urea capacity at Sur Industrial Area by 1.3m tonnes/year through a brownfield expansion, to 3m tonnes/year.

OMIFCO’s also produces 255,000 tonnes/ year of surplus ammonia, which is purchased by Indian Farmers Fertiliser Cooperative (IFFCO).

Production at full nameplate capacity was being exported to India (until 14 July) at the long term price of $135.68/tonne FOB (free on board) and then at $140/tonne FOB.

The price to India under the agreement is at a significant discount to current Arab Gulf levels, which are around $225-230/tonne FOB.

Production in excess of nameplate capacity in any year was being exported to India at a 5% discount over published prices of granular urea.

OMIFCO is owned by Oman Oil (50%), IFFCO (25%) and Krishak Bharati Cooperative Ltd (Kribhco) (25%).