Koch wins bid for Strike urea

A subsidiary of multinational conglomerate Koch Industries has been selected as Strike Energy’s sole offtake partner for product from a $2.3 billion planned urea project near Geraldton.

Under a non-binding term sheet signed between the parties, Koch Fertilizer is set to acquire 100 per cent of the 1.4 million tonnes per annum of granulated urea production from Strike’s proposed Project Haber operation.

A definitive offtake is yet to be negotiated, but key terms will include a 10 to 15 year supply period, pricing linked to international benchmarks and an undisclosed condition pertaining to a final investment decision on Haber.

Expressions of interest for fertiliser offtake from the project closed in May last year, which Strike claims was oversubscribed 2.5 times the proposed plant’s capacity.

Strike chief executive Stuart Nicholls said having a single offtake partner would provide grounding for financing.

“Securing Koch Fertilizer as Strike’s sole offtaker would give Project Haber a high degree of creditworthiness and financial security,” Mr Nicholls said.

“Having a single long-term offtaker for 100% of the urea production will provide the foundation for the financial architecture required to successfully finance this nationally significant development.”

Project Haber was awarded major project status by the federal government earlier this year.

It is currently in the pre-front end engineering design stage.

Strike Energy shares last changed hands up 1.64 per cent at 31 cents.