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Fertiglobe begins next growth chapter in Abu Dhabi

23 December 2024

 

The majority acquisition of ammonia-based fertilisers producer Fertiglobe by Abu Dhabi National Oil Company (Adnoc Group) could be an inflection point in its growth story, CEO Ahmed El-Hoshy says.

Fertiglobe is already the world’s largest seaborne exporter of urea and ammonia combined, exporting to 53 countries with a collective market share of about 10% of global trade.

Moreover, the company has invested about $500m, along with South Korea’s GS Energy Corporation and Japanese investment firm Mitsui & Company, to build a blue ammonia production facility in the Taziz Industrial Chemicals Zone in Abu Dhabi’s Ruwais, with a production capacity of 1 million tonnes a year (t/y).

“Adnoc is thinking about the future. Not just the immediate future, but medium to long term, in line with the move by Dr Sultan [Al-Jaber; group CEO and managing director of Adnoc] to future-proof the business,” El-Hoshy says. 

“So, when you are looking at a molecule like ammonia – where we’re a global leader, and are selling into some of the key markets – it’s a really good meeting of a big integrated energy company that reaches all over the world in traditional energy sales with an existing incumbent in the ammonia space that is operating in it today,” he says. 

“[The process is] not starting from scratch, but you’re starting from existing operations and expanding from there,” El-Hoshy tells MEED.

Adnoc, in a transaction completed in October, increased its shareholding in Fertiglobe to 86.2% through the acquisition of 50% + 1 share held by Netherlands-based OCI Global, which is backed by Egyptian billionaire Nassef Sawiris. The Abu Dhabi energy giant previously held a 36.2% stake in Fertiglobe.

The remaining 13.8% of Fertiglobe’s shares trade on the Abu Dhabi Securities Exchange, following the company’s stock listing in October 2022.

“I was previously at OCI for 15 years. Growing that business in the US and Europe is what I struggled with a little bit, because OCI was not a household name, like Adnoc is. To be able to go into Japan and South Korea, to the big power generators and utilities, to the governments in Europe, and having this long, far-reaching ability with Adnoc really can accelerate that,” the CEO says.

Fertiglobe is also studying the prospect of investing in another blue ammonia production facility in Abu Dhabi 

Ruwais project

In February 2023, the Fertiglobe-led joint venture awarded Italian firm Tecnimont the main contract for executing the engineering, procurement and construction works on the Taziz blue ammonia project.

El-Hoshy says construction work on the project is under way, with piling works ongoing and some of the civil foundation works to take place over the next six months. He expects the blue ammonia complex to enter operations in 2027. 

“We own 30% of the project currently. Mitsui and GS Energy own 10% stakes each. Adnoc, via Taziz, [Abu Dhabi’s industrial holding company] ADQ and some local shareholders own the remaining 50%. But Fertiglobe has now become the low-carbon ammonia vehicle for Adnoc. “So today we are at 30% in the project, and Adnoc is covering the costs till the project becomes operational. Once the project is commissioned, we will be able to acquire, at cost, almost double that of our stake today. Almost 55% that is,” the CEO says.

“To give you a sense, a project like this in the US would comfortably cost north of $1.2-$1.3bn. So that’s a big advantage on the capex side. Also, from the logistics perspective, being able to get to Asia is a huge advantage, versus in the US through the Panama Canal and all the way across the Pacific,” El-Hoshy says of the capex investment in the project. 

“So, there are a lot of key advantages here, obviously with the support of government and regulatory regime and the availability of renewable electricity here, whether it’s nuclear or solar or otherwise.

“Also, being able to share infrastructure in the broader Ruwais area in Abu Dhabi is another big advantage. We’re going to be using shared infrastructure for storage, for exports and for power utilities,” he says.

Second investment

Fertiglobe is also studying the prospect of investing in another blue ammonia production facility in Abu Dhabi, which could also be located within the Taziz industrial complex.

“Outside the one with GS and Mitsui, there’s another 1 million-t/y blue ammonia project that is pre-final investment decision that we’re doing [the] engineering [study] on. It’s called the Rabdan project,” he reveals.

“Adnoc/Fertiglobe is the sole developer of the Rabdan project. But we are going to bring in partners. The project will be handed over to Fertiglobe at cost and operations. But we are involved right from the start in commercialising and developing it,” the CEO says. 

El-Hoshy adds that Fertiglobe will not wait until the commissioning of the first blue ammonia project to make progress on the Rabdan project, and that work on both projects could proceed in parallel.

“We’ve done quite a bit of engineering work, some of it in-house. We we’re still in the [front-end engineering and design] feed stage now, but we’re yet to award any feed contract,” El-Hoshy says.

“Depending upon what the offtakes [agreements with potential customers] look like, we will be able to decide when to pull the trigger on the second [Rabdan] project,” he adds. 

The two projects in Abu Dhabi could add 2 million t/y of output potential, more than doubling Fertiglobe’s current commercial ammonia capacity of 1.6 million t/y and increasing its total sellable capacity to 8.6 million t/y of net ammonia and urea combined, in addition to other announced global projects.

Blue vs green ammonia

Fertiglobe is today, perhaps, one of the only companies in the world that has investments or stakes in both blue and green hydrogen/ammonia production. The company is also involved in a green ammonia project in Egypt, where it signed a 20-year ammonia offtake agreement with Egypt Green Hydrogen in July this year. Fertiglobe will supply the renewable ammonia to Germany’s Hydrogen Intermediary Network Company (Hint.co) following an offtake agreement between the two companies in August.

The signing of the offtake agreement with Hint.co came after Fertiglobe’s successful bid in the first tender by H2Global Foundation to supply green hydrogen-derived ammonia from Egypt to Europe.

“I'd say there is demand for both forms of ammonia right now. But I think when carbon has a price globally, like the carbon border adjusting mechanism in Europe that starts in 2026, you'll start seeing that blue will get the premium over time as that [EU tax] gets implemented. And blue definitely, in terms affordability, is much cheaper than green. So, I say, definitely blue kind of eats green's lunch,” El-Hoshy says.

“Green has technology risk. By technology risk I mean that, you might build all this and then the electrolysers don't work, or you have degradation, or they are up and down. They're very tough to operate, they're very temperamental and they haven't been proven over long periods of time,” he says. 

“And lastly, the EU carbon border tax just focuses on scope 1 and scope 2 emissions, and not scope 3. Scope 1 and 2 emissions for a blue plant, if done in the right way – where you use renewable electricity instead of regular electricity, and you capture over 99% of the CO2, which we intend to do with our blue projects – can be almost identical for a green molecule as a blue,” El-Hoshy says.

“So you think about me producing a much cheaper blue [molecule] without the technology risk and the headache, and I get the same carbon charge as green … that makes a lot more sense.”

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Indrajit Sen

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    https://image.digitalinsightresearch.in/uploads/NewsArticle/15305330/main2239.jpg
    Indrajit Sen