United Arab Emirates-based energy giant ADNOC has acquired a majority stake in local fertilizer producer Fertiglobe, marking a strategic expansion in the low-carbon ammonia sector. This acquisition involves integrating ADNOC's low-carbon ammonia assets into Fertiglobe, doubling the company's net ammonia production capacity.
Fertiglobe's CEO, Ahmed El-Hoshy, announced the $3.62 billion transaction where ADNOC purchased over 50% of Fertiglobe from European chemicals manufacturer OCI. This move is set to position Fertiglobe as a leader in low-carbon ammonia production.
Fertiglobe disclosed that ADNOC will transfer its shares in existing and future low-carbon ammonia projects to Fertiglobe at cost. This includes two projects located in Abu Dhabi with a combined capacity of 2 million tons. As a result of this deal, ADNOC's stake in Fertiglobe now stands at 86.2%.
This transaction is part of ADNOC's chemical sector expansion strategy aimed at reducing dependency on oil as the world shifts towards cleaner energy. Fertiglobe, the largest nitrogen fertilizer producer in the Middle East and North Africa, operates plants in the UAE, Egypt, and Algeria. Ammonia, primarily used in fertilizers and chemicals, also serves as a low-carbon fuel for power generation and shipping.
The production of low-carbon ammonia may involve carbon capture and storage technology. Fertiglobe stated that the integration will more than double its commercial ammonia annual capacity from the current 1.6 million tons, raising overall sales capacity to 8.6 million tons of net ammonia and urea.
The global chemicals industry faces numerous challenges, including China's capacity expansion and high energy costs in Europe, which have pressured profit margins and led companies to consolidate. Disruptions along the Red Sea trade route have also presented difficulties. Despite these hurdles, El-Hoshy mentioned that Fertiglobe maintains strong operations, with increased insurance and shipping costs generally being passed on in product pricing.
