Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Australia’s Woodside Energy has struck its second deal for US assets in a matter of weeks, agreeing to pay $2.35bn to buy a low-carbon ammonia project in Texas from OCI Global.
The acquisition by Perth-based Woodside, Australia’s largest oil and gas developer, comes on the heels of its $1.2bn takeover of the struggling US liquefied natural gas developer Tellurian in late July.
The company has been on the hunt for acquisitions to bolster its growth prospects and has said it is seeking to become a “global LNG powerhouse”. Woodside traces its roots to the 1950s and doubled in size in 2022 when it acquired BHP’s oil and gas division.
The deal means Woodside will expand its investment in ammonia, a compound used in fertilisers that has gained prominence in recent years as a way of transporting and storing hydrogen. This has been pitched as a way to decarbonise sectors such as trucking and shipping.
So-called blue ammonia is made in the same way as traditional ammonia by using gas, but with the carbon byproduct captured and stored. Carbon capture technology is undeveloped at scale and has been criticised for extending the reliance on fossil fuels.
A number of big oil and gas groups — including ExxonMobil, Saudi Aramco and Abu Dhabi National Oil Company — have invested in blue ammonia facilities, betting it will play a role in the energy transition.
The OCI facility in Beaumont, Texas, is one of the biggest blue ammonia projects under construction, expected to produce 1.1mn tonnes a year.
For Amsterdam-listed OCI, the chemicals and fertiliser empire led by Egypt’s richest man Nassef Sawiris, the sale comes as part of a broad and continuing break-up plan.
OCI’s board approved a strategic review of all business lines as well as its Netherlands listing venue last year after Jeff Ubben, a US activist investor, bought a 5 per cent stake. He pressed the group to explore options, including asset sales to improve shareholder returns.
Ubben had cited the ammonia project in Texas as one of OCI’s assets that could potentially attract interest from energy groups. It is set to begin production next year.
Woodside is acquiring all of the equity in the project, in a deal expected to close in the second half of this year.
Sawiris, whose personal assets include English football club Aston Villa, has already struck deals to sell other parts of OCI. Last December, the group agreed to offload two fertiliser holdings for about $3.6bn apiece, to Adnoc and Koch Industries of the US.
The Egyptian businessman told the Financial Times in a rare interview earlier this year that OCI could be turned into a cash-shell company that pursues acquisitions in new industries.
In its end-of-year earnings for 2023, OCI said it would distribute at least $3bn to shareholders this year.
Shares in OCI have fallen 17 per cent this year, giving it a market value of €4.7bn. Woodside shares have dropped 20 per cent this year and the company has a market value of $34bn.
Read the full article here
