Sector News

Borealis and Agrifos to form JV for ammonia production project in US

May 21, 2015
Chemical Value Chain
Borealis says that it has reached a preliminary agreement with Agrifos Partners (Miami Beach, FL), a project development company, to jointly develop a world-scale ammonia project through its Gulf Coast Ammonia (GCA) unit. GCA was formed by Agrifos Partners to establish the world-scale ammonia plant. The plant will be located within an existing chemical site along the Texas Gulf Coast. GCA is in final negotiations with a short list of strategic site owners and expects to make a final site selection within the coming few months, Borealis says. The project will utilize hydrogen and nitrogen feedstock, with pricing linked to US natural gas indexes. The brownfield project is scheduled for mechanical completion and start-up in early 2019. The site will benefit from existing infrastructure and excellent logistics capabilities which will allow product supply to a variety of long-term off-takers and customers, Borealis says. The final agreement with Borealis, which would be subject to its supervisory board approval, contemplates significant equity participation by Borealis in the project. Borealis would also enter into a long-term offtake agreement for about 40% of the ammonia produced by the plant.
 
“We have a clear strategy of expanding our global nitrogen business,” says Markku Korvenranta, Borealis executive v.p./base chemicals. “By participating in the development of, construction of and offtake from a world-scale project in the United States, Borealis is able to secure long-term supplies of ammonia based on the attractive economics of US natural gas. It also is a key step in the Borealis goal to sell 10 million m.t. of nitrogen-based fertilizer products per year by 2020. Gulf Coast Ammonia’s project is all the more compelling because it builds on existing site capabilities and assets along the US Gulf Coast.”
 
Agrifos has extensive experience in acquiring, developing and operating fertilizer production assets. The company expects to make further announcements in the near future concerning additional product offtake commitments, feedstock supply arrangements, permitting and construction contracts, Borealis says. GCA has engaged Macquarie Capital to serve as its financial advisor for the arrangement of a non-recourse project financing. 
 
By Deepti Ramesh
 

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