Linde plc will spend roughly $5bn on capex and acquisitions in 2023, CEO Sanjiv Lamba said on the company’s 4Q22 earnings call.
That includes a long-term agreement to supply clean hydrogen and other industrial gases to OCI’s new blue ammonia plant in Beaumont, Texas. Linde will build, own and operate an on-site complex by 2025 which will include autothermal reforming with carbon capture, plus a large air separation plant
The company estimates a return profile in the double digits for the project, Lamba said.
“This is a traditional industrial gas project no different to any other that we do and that’s how we would then factor the return coming back into the returns you would see hitting the EPS,” Lamba said.
Lamda also expressed confidence in the company’s ability to complete the project on time in 2025 in spite of its complexities. He noted Linde has already been working on the project for a while, and is in discussions with major carbon capture players, some of which already hold or are in the process of obtaining a federal Class VI permit for carbon dioxide sequestration.
The OCI project will connect to Linde’s existing pipeline in the region, Lamba said. “We have demand for that blue hydrogen and yes, there is a premium,” Lamba said of the company’s existing grey hydrogen customers.
The partnership with OCI helped add to the company’s project backlog, defined as contractual growth projects with secured returns, which now stands at $9.2bn, Lamba said. Last year was also a record year for small on-site wins, with 52 new secured contracts providing revenue for the next decade.
Lamba said the industrial gasses giant has “no interest to own or speculate” in the global chemicals market and will instead seek offtakers like OCI for its products. OCI is an expert in ammonia production, logistics and marketing, things Linde does not want to engage in.
Meanwhile, Linde has started the process of selling $2bn in gas projects, including Linde’s $1.4bn project with Exxon Mobile in Singapore, Lamba said.
