Now, both the partners in the project will soften their stand on key issues such as the precondition of a minimum Indian sourcing of capital goods worth $110 million and Oman's demand for selling part of the production to other clients, the two major hurdles to the finalisation of the project in the Gulf state.

According to sources in the ministry of chemicals and fertilisers, the decision was taken at a bipartite talks in Oman which was attended by officials from both sides.

It is learnt that the approval on action to be taken on outstanding issues on the project was accorded by the Cabinet Committee on Economic Affairs (CCEA) recently wherein it was decided that the total equity investment by Indian sponsors would be without the rider of ensuring capital goods sourcing from India.

Similarly, the issue of India's insistence on buying the entire output from the plant for at least 10 years will be sorted out through ``more flexibility''.

Recently, a high-power Indian delegation visited Oman and held several rounds of talks to reach a compromise. The officials from the sultanate will come to Delhi next month to sign the final agreement.

It is believed that both sides also discussed issues relating to compensation payable by Oman in case it fails to supply gas and compensation payable by the Oman India Feritiliser Company (OMIFCO) to the Indian Government in the event of its failure to deliver urea.

On the other hand, India will not insist on getting the entire supply from Oman.

When contacted, Minister for Chemicals and Fertilisers SS Dhindsa said the ``final touches to the agreement would be given in March'' but did not elaborate.

However, ``we are determined to reach a consensus and then start to tackle the remaining issues of financing and the EPC contract,'' he said.