Fertiglobe to more than double net ammonia capacity as ADNOC becomes top shareholder
By Federico Maccioni
DUBAI, Oct 15 (Reuters) -Fertiglobe FERTIGLB.AD expects to more than double its net ammonia production capacity as it integrates ADNOC's portfolio of low carbon ammonia projects following the energy giant's purchase of a majority stake in the fertiliser maker on Tuesday.
Fertiglobe CEO Ahmed El-Hoshy told Reuters the deal completion, which saw ADNOC buy just over a 50% stake in the company from European chemical producer OCI OCI.AS for $3.62 billion, would speed up Fertiglobe's "path towards becoming a low carbon ammonia powerhouse".
The deal, which lifts ADNOC's stake to 86.2%, is the latest move by the state-owned Abu Dhabi group to expand in the chemicals sector as it looks to cut its dependence on oil in the global switch to cleaner energy.
Fertiglobe is the largest producer of nitrogen fertilisers in the Middle East and North Africa, with plants in the UAE, Egypt and Algeria.
Ammonia is mainly used in fertilisers and chemicals, but can also serve a low carbon fuel in power generation and marine bunker operations.
Under Tuesday's deal, "ADNOC will transfer its stakes in existing and future low carbon ammonia projects to Fertiglobe at cost," Fertiglobe said in a statement.
Low carbon ammonia can involve using carbon capture and storage technology in production.
Fertiglobe said the integration would more than double its current merchant ammonia capacity of 1.6 million tons per annum (mtpa) and boost its overall sellable capacity to 8.6 mtpa of net ammonia and urea combined, in addition to other announced global projects.
Chemical companies face challenges includinga capacity build-up in top market China and high energy costs in Europe, which have depressed margins and forced firms to consolidate. Red Sea trade route disruptions have also caused problems.
Asked about those disruptions, El-Hoshy said Fertiglobe's operations were "fine", with some increase in insurance premiums and freight costs generally passed on in the delivered product.
Reporting by Federico Maccioni
Editing by Mark Potter
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