Ruwais Fertiliser Industries (Fertil), which is looking to expanding its capacity, will do so only when the global fertiliser market situation improves, a report said.

The company has already reduced its production and exports of ammonia and urea, said a Gulf News report.

The regional chemical fertiliser industry has recently been hit by new capacity in the Gulf and outside, volatile prices and India's fertiliser policy, the report said.

The company is looking at expanding capacity, but when to expand is crucial. Global market conditions should improve, said Jamal Awartani, head of export sales.

Fertil is a venture between Abu Dhabi National Oil Company (Adnoc) and TotalFinaElf.

Ammonia production at Fertil's Ruwais plant fell to 424,000 tonnes in 2000 from 463,000 tonnes in 1999, and urea to 529,000 tonnes from 590,000 tonnes.

Fertil's main export markets are India and Vietnam, Sri Lanka and Bangladesh with the US also becoming a major importer last year.

The company pursued throughout the year its policy of progressive diversification into various markets spread over 18 countries. While Brazil, Argentina and Uruguay joined the urea importing countries, Mauritius joined the ammonia importing countries, general manager Saif Al Ghafli said.

Awartani said the turmoil in the urea market was due to additional capacities from several markets, as also India's policy of subsidising fertilisers, especially urea.

The company may have to face a few bumps in the coming year until the market absorbs these changes, the export official said.

New global capacity that came in last year and the first quarter of 2001 was exerting pressure on prices. Competition in the Gulf was stiff with all the GCC states, except Oman, into chemical fertilisers, he added.

Al Ghafli said the company's efforts to reduce operating expenditure were successful and a balanced budget was prepared for 2001 in addition to the five-year plan for 2001-2005.