28 April 2012
The Indian government has given its assent to a compromise proposal by the Omani government setting the price of natural gas as feedstock for the Oman-India Fertilizer (Omifco) project at $1.5 per million British thermal unit (mmBtu) for the year, Indian media reported at the weekend. The nod will ensure the smooth flow of fertilizer output from Omifco's Sur plant to the Indian market, and ends a months-long dispute over a sharp hike in the gas price announced by Oman.
Under an agreement reached by the two countries, Oman had pledged to supply gas to the Omifco plant at the rate of $0.77 per mmBtu for 15 years with effect from January 1, 2005. However, with gas prices having since soared on international markets, the Sultanate sought a higher price of $3 per mmBtu with effect from January 1, 2012.
Indian newspapers reported on Thursday that New Delhi had approved a recommendation from India's Fertilizer Ministry mooting the acceptance of Oman's revised offer. Under the revised deal, Muscat agreed to supply gas to Omifco at the rate of $1.5 per mmBtu with an annual increase of $0.5 mmBtu. Consequently, India will no longer seek arbitration of the price hike dispute via the International Tribunal in London, the papers added.
OMIFCO, a joint venture firm between Oman's state-owned Oman Oil Co (OCC) and Indian co-operative firms KRIBHCO and IFFCO, produces about two million tonnes of urea a year for exports to India. IFFCO and KRIBHCO hold a 25 per cent stake each in OMIFCO, while the rest is held by Oman Oil Company.
The Indian government has given its assent to a compromise proposal by the Omani government setting the price of natural gas as feedstock for the Oman-India Fertilizer (Omifco) project at $1.5 per million British thermal unit (mmBtu) for the year, Indian media reported at the weekend. The nod will ensure the smooth flow of fertilizer output from Omifco's Sur plant to the Indian market, and ends a months-long dispute over a sharp hike in the gas price announced by Oman.
Under an agreement reached by the two countries, Oman had pledged to supply gas to the Omifco plant at the rate of $0.77 per mmBtu for 15 years with effect from January 1, 2005. However, with gas prices having since soared on international markets, the Sultanate sought a higher price of $3 per mmBtu with effect from January 1, 2012.
Indian newspapers reported on Thursday that New Delhi had approved a recommendation from India's Fertilizer Ministry mooting the acceptance of Oman's revised offer. Under the revised deal, Muscat agreed to supply gas to Omifco at the rate of $1.5 per mmBtu with an annual increase of $0.5 mmBtu. Consequently, India will no longer seek arbitration of the price hike dispute via the International Tribunal in London, the papers added.
OMIFCO, a joint venture firm between Oman's state-owned Oman Oil Co (OCC) and Indian co-operative firms KRIBHCO and IFFCO, produces about two million tonnes of urea a year for exports to India. IFFCO and KRIBHCO hold a 25 per cent stake each in OMIFCO, while the rest is held by Oman Oil Company.
© Oman Daily Observer 2012
