However, both the governments have to formally approve the plans to restructure the much-delayed project. The agreement follows a series of discussions between minister for chemicals and fertilisers Suresh Prabhu and his Omani counterpart minister for national economy Ahmed Bin Abdulnabi Macki and minister of commerce and industry Maqbool Bin Ali Sultan.

Prabhu, told The Oman Observer that the project is in India's long-term interest as it reduces it's vulnerability to urea price fluctuations in international market.

"It reduces dependence by India on urea imports from other countries which are prone to wide price fluctuations. The project will provide an uninterrupted supply of superior quality urea and thereby improve India's food security."

Moreover, India's proximity to Oman will reduce the transportation cost of fertilisers.Imports to India of urea have been increasing despite improved production, he said.

Prabhu said the availability of abundant natural gas in Oman is another advantage and the assurance made by Oman's government to provide an uninterrupted supply of natural gas at most competitive prices will benefit the project. "The project will serve mutual interests and it is on a sound commercial footing. Once I return to India, various authorities including the cabinet will take stock of the new developments and then try to proceed with the plans," he said. "We have decided to take the necessary measures to safeguard mutual interests while implementing the project."

He said the project has been delayed for a variety of reasons and some of these were beyond the control of both countries. The decline in urea prices in the international market had influenced the viability of the project and therefore, leaders expressed grave concern.

The lending institutions have asked for sovereign guarantee from the indiangovernment. However, the government made it clear that though a sovereign guarantee cannot be provided, the project will be restructured in a way that is satisfactory to the lending institutions, he said.