Australian energy major Woodside has announced a definitive agreement to purchase OCI Clean Ammonia from OCI Global for $2.35bn (A$3.62bn).
The acquisition is expected to bolster Woodside’s position in the lower-carbon ammonia market, which is seeing increased demand as the energy industry pivots towards more sustainable solutions.
The asset in question is a clean ammonia project currently under construction in Beaumont, Texas.
Woodside will pay 80% of the purchase price upon closing the transaction, with the remaining balance due at project completion, which is contingent on meeting specific terms and conditions.
The deal includes capital expenditure (capex) through the completion of the project's first phase.
Phase 1 of the project has a design capacity of 1.1 million tonnes per annum (mtpa) and aims to commence ammonia production from natural gas by 2025.
Subsequently the facility will focus on lower-carbon ammonia production, which involves natural gas combined with carbon capture and storage (CCS), targeted to start in 2026.
OCI will retain control over the construction, commissioning and start-up of the facility, directing contractors until the project is fully operational. Once the facility is staffed and operational, control will transition to Woodside.
The project has secured agreements for feedstock and CCS capacity, with Linde providing the nitrogen and lower-carbon hydrogen feedstock from a facility that is due to be completed in early 2026.
In the interim, feedstock will be supplied by Linde and other Gulf Coast suppliers.
The CCS services will be provided by ExxonMobil, beginning in 2026.
Initially, the project will serve conventional ammonia customers, with plans to cater to lower-carbon ammonia clients in Europe and Asia once CCS is operational.
The facility has been designed to accommodate a second production train, with Woodside aiming for final investment decision-readiness for this phase in 2026 and projecting gross capex of $1.2bn–1.4bn.
Woodside CEO Meg O’Neill said: “This transaction positions Woodside in the growing lower-carbon ammonia market. The potential applications for lower-carbon ammonia are in power generation, marine fuels and as an industrial feedstock, as it displaces higher-emitting fuels.
“Global ammonia demand is forecast to double by 2050, with lower-carbon ammonia making up nearly two-thirds of total demand. This project exceeds our capital allocation framework targets for new energy projects. Both phases are expected to achieve an internal rate of return above 10% and payback of less than ten years.”
The transaction is expected to close in the second half of 2024, subject to OCI shareholder approval and customary conditions.
This acquisition follows Woodside Energy's recent agreement to purchase Tellurian, a US-based LNG company, for $1.2bn.
