Woodside has announced the completion of its acquisition of OCI Clean Ammonia from OCI in a deal valued at $2.35bn (A$3.62bn).
The Australian energy company’s purchase of the US-based clean ammonia project is expected to strengthen its foothold in the lower-carbon ammonia market, amid growing demand for environmentally friendly energy solutions.
Located in Beaumont, Texas, the clean ammonia project is currently under development by OCI Clean Ammonia.
With a design capacity of 1.1 million tonnes per annum (tpa), Phase 1 of the project is on track to start ammonia production from natural gas by 2025.
The subsequent phase will focus on producing lower-carbon ammonia, utilising natural gas in conjunction with carbon capture and storage (CCS) technology, with a target start date in 2026.
The consideration for the acquisition encompasses capital expenditure (capex) up to the completion of the project’s first phase, with $1.88bn already paid and the remaining $470m due upon project completion.
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By GlobalDataAs per the initial announcement in August, OCI will retain responsibility for the construction, commissioning and initial operations of the facility until provisional acceptance.
In preparation for the facility’s operation, Linde and other Gulf Coast suppliers will provide the feedstock.
ExxonMobil is set to deliver CCS services starting in 2026.
Initially, the project will supply conventional ammonia customers, with the intention to expand its market to lower-carbon ammonia clients in Europe and Asia once the CCS technology is operational.
The facility’s design includes provisions for a second production train.
Woodside is targeting an FID for this additional phase by 2026, with an estimated gross capex ranging from $1.2bn to $1.4bn.
Woodside CEO Meg O’Neill 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.
“The transaction will generate returns exceeding our capital allocation framework targets, with Phase 1 of the project expected to be free cash flow accretive from 2026. It also represents a material step towards delivering our scope 3 investment and abatement targets.”
Last month, Woodside agreed to supply 400,000tpa of liquefied natural gas to Japan’s JERA.
