Fertiglobe to more than double net ammonia capacity as ADNOC becomes top shareholder

OCI Holdings

15/10/2024 15:08

By Federico Maccioni
       DUBAI, Oct 15 (Reuters) - Fertiglobe  FERTIGLB.AD 
expects to more than double its net ammonia production capacity
as it integrates ADNOC's portfolio of low carbon ammonia
projects following the energy giant's purchase of a majority
stake in the fertiliser maker on Tuesday. 
    Fertiglobe CEO Ahmed El-Hoshy told Reuters the deal
completion, which saw ADNOC buy just over a 50% stake in the
company from European chemical producer OCI  OCI.AS  for $3.62
billion, would speed up Fertiglobe's "path towards becoming a
low carbon ammonia powerhouse".
    The deal, which lifts ADNOC's stake to 86.2%, is the latest
move by the state-owned Abu Dhabi group to expand in the
chemicals sector as it looks to cut its dependence on oil in the
global switch to cleaner energy.
    Fertiglobe is the largest producer of nitrogen fertilisers
in the Middle East and North Africa, with plants in the UAE,
Egypt and Algeria.
    Ammonia is mainly used in fertilisers and chemicals, but can
also serve a low carbon fuel in power generation and marine
bunker operations.
    Under Tuesday's deal, "ADNOC will transfer its stakes in
existing and future low carbon ammonia projects to Fertiglobe at
cost," Fertiglobe said in a statement.
    Low carbon ammonia can involve using carbon capture and
storage technology in production.  
    Fertiglobe said the integration would more than double its
current merchant ammonia capacity of 1.6 million tons per annum
(mtpa) and boost its overall sellable capacity to 8.6 mtpa of
net ammonia and urea combined, in addition to other announced
global projects.
    Chemical companies face challenges including a capacity
build-up in top market China and high energy costs in Europe,
which have depressed margins and forced firms to consolidate.
Red Sea trade route disruptions have also caused problems. 
        Asked about those disruptions, El-Hoshy said
Fertiglobe's operations were "fine", with some increase in
insurance premiums and freight costs generally passed on in the
delivered product.

 (Reporting by Federico Maccioni
Editing by Mark Potter)
 ((Federico.maccioni@thomsonreuters.com; +971 527370852))