Woodside completes ammonia plant deal

Woodside has finalised its US$2.35 billion acquisition of a low carbon ammonia project in Texas from fertiliser and industrial chemicals heavyweight OCI NV.

The oil and gas major told the market it had completed the acquisition of OCI Clean Ammonia- the entity which holds the project- after initially announcing the deal early last month.

OCI planned to combine an ammonia plant and blue hydrogen system capable of capturing 95 per cent of carbon dioxide producing low carbon ammonia from 2026.

First ammonia from the under-construction project is tipped from 2025, and first lower carbon ammonia from 2026. Woodside said OCI would manage the construction of the project through provisional acceptance.

The US$2.35 billion price tag includes capital expenditure until the completion of the first phase. Woodside said it had paid 80 per cent of the consideration and would hand over the remaining 20 per cent at the project’s completion.

Woodside CEO Meg O’Neill said the transaction positioned Woodside as an early mover in the growing lower carbon ammonia market.

“The potential applications are in power generation, marine fuels and as an industrial feedstock, as it displaces higher-emitting fuels,” she said.

“Global ammonia demand is forecast to double by 2050 with lower carbon ammonia making up nearly two-thirds of total demand. Evolving decarbonisation policies have potential to attract a premium price for lower carbon ammonia.3

“The transaction will generate returns exceeding our capital allocation framework targets, with phase one of the project expected to be free cash flow accretive from 2026.

“It also represents a material step towards delivering our scope three investment and abatement targets.”

Fuel from gas handler Linde’s nitrogen and low carbon feedstock facility is expected to be fed into the plant soon after commissioning.

The plant could abate 1.6 million tonnes of carbon dioxide per year, and an expansion could double that figure which would meet 60 per cent of Woodside’s emissions abatement target.

ExxonMobil will provide carbon capture and storage services to Linde.