The government of Oman plans to substantially increase the price of natural gas supplied to industries using the fuel as feedstock, including Oman India Fertiliser Company, a senior official has said.
"We want to increase the price at which natural gas is sold to several industries. Negotiations are going on with most of the industries that use natural gas as feedstock. These industries include Oman India Fertiliser Company (Omifco) and a fertiliser plant in Sohar," a senior official at Oman's ministry of oil and gas said.
Omifco ships around two million tonnes of urea, which is its entire production, to India under an agreement the country has with the Oman government.
Under the contract, the rates were fixed for 15 years.
It was reported earlier that Oman has already indicated to the Indian government its intent to raise the price at which it sells natural gas to Omifco by four times.
However, a senior Omifco official said he was not aware of the development.
If the gas price is hiked, it is likely that the cost of urea imports from Oman will go up too.
"Hopefully, we will reach an agreement (with industries on fixing the price) soon," the Oman oil and gas ministry official said.
Indian Farmers Fertiliser Cooperative (Iffco) and Krishak Bharati Cooperative each own a 25 per cent stake in Omifco.
The Oman government's investment arm, Oman Oil Company, owns the remaining 50%.
The official said the price of natural gas was extremely low when the government fixed the rate a few years ago at the time these industries were conceived and started operation.
"It has to reflect the global energy prices," the official told The Times of Oman.
The move comes at a time when most gas-based industries in the country are seriously looking for additional gas allocation for expanding capacities, the news report said.
An important attraction for energy-intensive multinational companies to set up their manufacturing base in Oman has been the availability of cheap natural gas as energy.
Oman anticipates its daily associated and non-associated natural gas production to touch around 108 million cubic metres in 2011.