Woodside to acquire $3.61b lower carbon ammonia project

Woodside (ASX: WDS) will acquire 100% of OCI Clean Ammonia Holding B.V. and its lower carbon ammonia project for an all-cash consideration of about $3.61b (USD$2.35b).

With an advantageous location on the US Gulf Coast, the project will have access to multiple sources of feedstock and a deepwater port for international export.

The project is under construction and targets production of first ammonia from 2025 and lower carbon ammonia from 2026.

Woodside chief executive Meg O’Neill says the acquisition supports Woodside’s strategy to thrive through the energy transition.

“This transaction positions Woodside in the growing lower carbon ammonia market,” she said.

“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% and payback of less than 10 years.

“This acquisition is a material step towards delivering our Scope 3 investment and abatement targets.

“Phase 1 has the capacity to abate 1.6mtpa of carbon dioxide equivalent and with the addition of Phase 2 the Project has the capacity to abate 3.2mtpa carbon dioxide equivalent, or over 60% of our Scope 3 abatement target.”

The nitrogen and lower carbon hydrogen feedstock will be sourced primarily from Linde which expects to complete its feedstock facility in early 2026. Early supply of feedstock for the project will come from multiple suppliers, including Linde, from available capacity in the Gulf Coast.

The transaction is targeted to complete in the second half of the 2024 and is subject to OCI N.V.’s shareholder vote and satisfaction of customary conditions precedent.