Australia-based global energy company Woodside Energy announced today an agreement to acquire a Texas-based low carbon ammonia plant for $2.35 billion from clean fuels-focused producer OCI Global, citing long-term industrial demand growth for cleaner energy solutions.

Demand for ammonia globally is currently around 200 Mtpa, with approximately 80% used for fertilizer applications. According to Woodside, the acquisition comes as the energy transition is anticipated to result in a doubling of this demand by 2050, and as the market for lower carbon ammonia is anticipated to exceed the total ammonia market today, with Europe and Asia seen as key demand centers, driven by policies incentivizing the use of clean energy sources for industrial applications, such as carbon pricing policies including the EU’s ETS and CBAM, and similar schemes being developed in Asia.

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.”

Woodside added that the acquisition will materially support the company’s achievement of its Scope 3 goals, which include targets to invest $5 billion in new energy products and lower carbon services, and to take final investment decisions (FID) on new energy products and lower carbon services with total abatement capacity of 5 Mtpa CO2-e, by 2030.

The project currently under construction, is located in Beaumont, Texas, on the U.S. Gulf Coast, with capability to serve domestic and international customers, with a design capacity in the first phase of 1.1 Mtpa. First ammonia production is anticipated in 2025, with lower carbon ammonia production, derived from natural gas paired with carbon sequestration, targeted for 2026. Agreements are in place for nitrogen and lower carbon hydrogen feedstock from Linde, and for CCS services which will be provided to Linde by ExxonMobil. FID on a second phase for another 1.1 Mtpa production train is targeted for 2026.

According to Woodside, the project has the capacity to abate 1.6 Mtpa of CO2-e in Phase 1, increasing to 3.2 Mtpa CO2-e in Phase 2.

Under the terms of the all-cash agreement, Woodside will pay 80% of the purchase price at the closing of the transaction, and the balance at project completion, and OCI will continue to manage the construction, commissioning and startup of the facility until the project is fully staffed and operational.

Ahmed El Hoshy, CEO of OCI, said:

“I would like to thank the entire OCI team for helping to develop and build such a ground-breaking project. We are confident that Woodside, as future owner and operator of OCI Clean Ammonia, will add significant value to this peerless collaboration. We look forward to working closely with the Woodside management team to fully complete the facility in the coming months, and to ensure continuity and successful stewardship through closing and beyond.”