Sector News

ADNOC partners with OCI to form fertilizer powerhouse

June 18, 2019
Chemical Value Chain

The Abu Dhabi National Oil Company (ADNOC) and the Netherlands-based OCI, a producer and distributor of natural gas-based fertilizers and chemicals, are joining forces, the companies announced Monday.

The new joint venture will create the world’s largest exporter of nitrogen fertilizer, as well as the largest producer in the Middle East and North Africa region.

Speaking to CNBC’s Hadley Gamble in Abu Dhabi, OCI CEO and Egyptian billionaire Nassef Sawiris pointed to consolidation as a key strategy for improving returns.

“This is an industry that is not very proud that we can’t achieve high single-digits return on capital employed. We have to do something to improve the returns and one is consolidate our various manufacturing platforms, pool them together and be able to serve our customers along multiple geographic regions,” he said.

The joint venture aims to expand the companies’ market share and the diversity of its Middle Eastern and African production channels.

“ADNOC is very well positioned to serve the Asian market, our assets in Egypt are well-positioned to serve East Africa as well as Eastern Europe, our assets in Algeria are incredibly close to the Western European markets as well as Latin America,” the CEO added. “So this platform will be unique in terms of its ability to deliver to our customers the products in a timely manner and in a cost-efficient way in terms of mitigating freight costs.”

The entity will have a production capacity of 5 million tons of urea and 1.5 million tons of sellable ammonia, according to an ADNOC press release, which listed annual revenues for the combined entity at $1.74 billion, based on 2018 pro forma figures.

OCI and ADNOC will own a 58% and 42% stake in the venture, respectively, which will be based in Abu Dhabi and registered with Abu Dhabi Global Market.

The move is the latest step in ADNOC’s strategy to expand its downstream portfolio. The company has inked a number of new petrochemical partnerships this year, including with Austria’s OMV and Borealis in March. It’s also sold stakes of its refining units to international firms and signed pipeline infrastructure deals with institutional investors in the U.S.

Sultan Ahmed Al Jaber, ADNOC group CEO and UAE minister of state, said in a statement: “Pooling our assets and capabilities is a value enhancing step for both companies, allowing us to leapfrog competitors to become the top nitrogen export platform globally. It will also enable us to access new markets, benefiting both existing and new customers.”

By Natasha Turak

Source: CNBC

comments closed

Related News

June 24, 2022

BASF to build commercial scale battery recycling black mass plant in Schwarzheide, Germany

Chemical Value Chain

BASF will build a commercial scale battery recycling black mass plant in Schwarzheide, Germany. This investment strengthens BASF’s cathode active materials (CAM) production and recycling hub in Schwarzheide. The site is an ideal location for the build-up of battery recycling activities given the presence of many EV car manufacturers and cell producers in Central Europe.

June 24, 2022

Clariant restructures business units, reorganizes leadership

Chemical Value Chain

Clariant says it is reducing its number of businesses from five to three, by merging units, under a reorganization that is in line with the company’s purpose-led strategy and cultural transformation. The moves will position Clariant for long-term sustainable growth, the company says.

June 24, 2022

Chemicals & Plastics Procurement: what to expect in the second half of 2022

Chemical Value Chain

Chemicals & plastics industry has the most diversified end-use market across all manufacturing industries. The industry returned to growth in 2021 but a supply chain crunch prevented it from becoming stronger. The market is likely to stabilize in the second half of 2022 with a supply-demand balance.