Prices for blue ammonia as a maritime fuel could come in at $900 per ton, a prospect that underscores OCI Global’s enthusiasm for its focus on decarbonizing energy transition projects.
OCI CEO Ahmed El-Hoshy made the remark today in discussing the company’s recently announced asset sales that will bring in roughly $6.2bn in net proceeds, which will be used to reduce debt, return value to shareholders – and make additional investments in energy transition projects.
The company launched a strategic review of its asset portfolio earlier this year under pressure from activist investor Inclusive Capital.
Announced Friday, OCI offloaded its 50% stake in fertilizer producer Fertiglobe to Abu Dhabi National Oil Company (ADNOC) in a deal worth $3.62bn. OCI and ADNOC separately announced they will explore opportunities for collaboration on joint venture investments in development projects in decarbonization and product distribution across North America and Europe.
Today, OCI announced it has reached a deal to sell 100% of the equity interests in Iowa Fertilizer Company to Koch Ag & Energy Solutions for $3.6bn. OCI was advised by Morgan Stanley as financial advisor on the transaction and Cleary Gottlieb served as legal counsel.
Texas Blue
The company’s biggest investment globally is the 1.1 million ton Texas blue ammonia project, which is in development with partners Linde and ExxonMobil. OCI is in talks with Asian offtakers and other strategics about phase 1 offtake and a minority equity investment in that project. El-Hoshy also said previously the company is exploring adding a second line to expand production at the site.
“Once the first line has some of that ammonia spoken for, that second line has the benefit of a lot of the utilities, the off-site being already in place, so that we’re talking about mainly inside the battery limit-type investments save for a few utility-type investments,” he said.
He added: “So you’re talking about a dollar per ton that’s very attractive where we’re doubling size. We don’t have to really do much in terms of engineering around the process facilities for that plan.”
The company also said it would be doubling its methanol production and entered into a green hydrogen offtake agreement with New Fortress Energy for green ammonia production in Texas. The blue ammonia site also has the capacity to use green hydrogen as a feedstock in the future.
Pricing possibilities
El-Hoshy refrained from giving specific ammonia price guidance, but said, “What we do see are big supports around the carbon border adjustment mechanism (CBAM) starting to price CO2 over time, starting in 2026.”
He added that, if ammonia is ratified as a maritime fuel under FuelEU in Europe, blue ammonia could reach a value of $900+ per ton.
Further expansion at the Texas blue ammonia site would benefit from having existing methanol and ammonia assets as well as dock infrastructure and storage at the Beaumont site, the executive said. Similarly, a burst of project activity following approval of the Inflation Reduction Act has led to escalating costs, which is only expected to continue.
“In the case of our blue ammonia project, as well as even Linde’s portion, which is the autothermal reformers and air separation units, this is all proven technology,” he said. “We’re talking about state of the art technology where Linde can capture over 95% of the CO2, and we’re using KBR ammonia technology, which is the most efficient ammonia technology in the world.”
He added: “So, you know, we don’t have that issue of going into the market too early from a technology perspective” as with large green ammonia or green hydrogen projects.
