Woodside to Buy Ammonia Project on US Gulf Coast for $2.35B
Australia’s Woodside Energy has signed an agreement with Dutch-based OCI Global to acquire its clean ammonia project for $2.35 billion, which is still under construction on the U.S. Gulf Coast in Texas.
Woodside has entered into a binding agreement to acquire 100% of OCI Clean Ammonia Holding, and its lower carbon ammonia project in Beaumont, in a move that strengthens the company’s transition to green energy.
The Project is under construction and targets production of first ammonia from 2025 and lower carbon ammonia from 2026, and according to Woodside, it provides it with arly-mover advantage in 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 percent and payback of less than 10 years,” said Meg O’Neill, Woodside’s CEO.
The project can serve customers domestically and internationally. Phase 1 has a design capacity of 1.1 Mtpa and is under construction.
Lower carbon ammonia production, derived from natural gas paired with carbon sequestration, is targeted for 2026 following commencement of CCS operations.
Agreements for the feedstock and CCS capacity are in place. The nitrogen and lower carbon hydrogen feedstock will be sourced primarily from Linde. The CCS services will be provided to Linde by ExxonMobil and are expected to be available in 2026.
The Project will target conventional ammonia customers at start-up and will target lower carbon ammonia customers in Europe and Asia when CCS is operational.
The facility is designed to accommodate a second 1.1 Mtpa production train (Phase 2). Phase 2 remains pre-final investment decision (FID).
Woodside will target FID-readiness for Phase 2 in 2026 with an expected gross capital expenditure range of $1.2 - 1.4 billion.
OCI said it will continue to manage the construction, commissioning and startup of the facility and will continue to direct the contractors until the project is fully staffed and operational, at which point it will handover to Woodside.
The transaction is targeted to complete in the second half of the 2024 and is subject to OCI’s shareholder vote and satisfaction of customary conditions precedent.