Oil giant Adnoc to become major clean hydrogen and ammonia player after agreeing $3.6bn deal to buy Fertiglobe
State-owned company purchases OCI’s majority stake in joint venture, which is world’s largest seaborne exporter of fertilisers made from H2 and nitrogen
Abu Dhabi state-owned oil company Adnoc (Abu Dhabi National Oil Company) has entered into a binding agreement to buy out partner OCI’s majority stake in the two companies’ joint-venture fertiliser company, Fertiglobe, for $3.62bn.
The deal places Adnoc at the centre of the emerging global clean ammonia market.
Fertiglobe is the world’s largest seaborne exporter of ammonia — which is expected to become both a major shipping fuel and the primary method of transporting clean hydrogen around the world in the years to come.
The joint venture is also the largest producer of ammonia — made by combining hydrogen with nitrogen from the air — and ammonia-based fertilisers in the Middle East and North Africa, as well as being an early mover in “sustainable ammonia” (both blue and green), with production facilities in Egypt, Algeria and the United Arab Emirates (UAE).
The transaction — which is expected to close next year, subject to approval by competition authorities — supports Adnoc’s plans “to establish a global growth platform for ammonia, a key lower carbon fuel and hydrogen carrier that is expected to play an important role in the energy transition”, the state-owned company says.
According to Forbes magazine, Fertiglobe is the 41st most valuable listed company in the Middle East, with a market value of $8.7bn and annual profits of $1.8bn.
The sale and purchase agreement will see Adnoc buy OCI’s “50% + 1 share” majority stake for 13.28bn dirhams ($3.62bn), and also contribute extra funding to OCI in the form of an “earn-out mechanism” for the financial years of 2024 and 2025, which is linked to commodity pricing and the free cash flow performance of Fertiglobe during this period.
Adnoc’s shareholding in Fertiglobe will increase from 36.2% today to 86.2%, with the remainder being “free float” shares traded on the Abu Dhabi Securities Exchange.
“This important transaction supports Adnoc’s ambitious chemicals growth strategy and accelerates our plan to establish a global growth platform for ammonia and clean ammonia,” said Khaled Salmeen, Adnoc’s executive director, downstream, marketing & trading directorate.
The chief executive of Adnoc is Sultan Ahmed Al Jaber, who was the president of the recent COP28 summit in Abu Dhabi, and is also chairman of state-owned renewables company Masdar — which has major green hydrogen expansion plans of its own — as well as being the minister of industry and advanced technology in the UAE cabinet.
In July, the UAE government approved a national hydrogen strategy that will see the country producing 1.4 million tonnes of green hydrogen annually by 2031 and 15 million tonnes by 2050.
Netherlands-based OCI is a major fertiliser producer in its own right, and claims to be the world’s largest third-largest manufacturer of nitrogen-based fertilisers, and the global number-one producer of green methanol, which is also destined to become a major shipping fuel of the future.