Sector News

BASF and Yara confirm plans to invest $600 million to build ammonia plant at Freeport

February 19, 2015
Chemical Value Chain
Yara International (Oslo) and BASF today announced that they have agreed to build the previously announced world-scale ammonia plant at BASF’s site at Freeport, TX. The two companies, in October 2013, announced that they are evaluating a possible joint investment in such a project in the US Gulf Coast, and the Freeport site was chosen last year for the proposed plant. The ammonia plant will use hydrogen as raw material. The 750,000-m.t./year ammonia plant will be owned 68% by Yara and 32% by BASF, the companies announced today. Total capital investment for the plant is estimated at $600 million. Yara and BASF will offtake ammonia from the plant in accordance with their equity share. Yara will also build an ammonia tank at the BASF terminal bringing Yara’s total investment in the project to $490 million. BASF will upgrade its current terminal and pipeline assets. KBR (Houston) has been awarded a fixed price turnkey contract for the engineering, procurement and construction of the project, the companies say. The plant is expected to be completed by the end of 2017. Yara will manage construction of the plant while BASF will operate the plant and the export terminal.
 
“Through the joint investment with Yara, we can take advantage of world-scale production economics and the attractive raw material costs in the United States,” says Wayne Smith, member of the board of executive directors of BASF, responsible for the chemicals segment. “We will thus strengthen our Freeport Verbund and the competitiveness of our nylon 6 value chain in the region,” Smith says.
 
The hydrogen technology reduces capital expenditures and maintenance significantly compared to a traditional natural gas based ammonia plant, the companies say. The technology also allows for lower carbon dioxide emissions. A long-term supply agreement for nitrogen and hydrogen has been signed with Praxair, linking the feedstock variable cost to the advantageous natural gas prices available at the US Gulf coast.
 
BASF is currently a major user of ammonia for its US downstream manufacturing activities and intends to further strengthen its backward integration, and Yara aims to strengthen its presence in the United States, through this project.
“This project will further strengthen Yara’s position in the global ammonia market and increase our footprint in the United States,” says Torgeir Kvidal, president and CEO of Yara.
 
By Deepti Ramesh
 

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