? World’s first ammonia plant paired with auto thermal reforming with 95%+ CO2 capture
? Provides early-mover advantage in growing lower carbon ammonia market1
? Exceeds capital allocation target of 10% internal rate of return2
? Free cash flow accretive from 2026 and earnings per share accretive from 2027
? Capacity to abate 3.2 Mtpa CO2-e at full development; over 60% of Woodside’s Scope 3
abatement target3
Woodside has entered into a binding agreement to acquire 100% of OCI Clean Ammonia Holding
B.V., and its lower carbon ammonia project in Beaumont, Texas (Project) for an all-cash consideration
of approximately $2,350 million. The Project is under construction and targets production of first
ammonia from 2025 and lower carbon ammonia from 2026. The consideration is inclusive of capital
expenditure through completion of the first phase (Phase 1).
Woodside CEO Meg O’Neill said the acquisition supports Woodside’s strategy to thrive through the
energy transition.
“This transaction positions Woodside in the growing lower carbon ammonia market. The potential
applications for lower carbon ammonia are in power generation, marine fuels and as an industrial
feedstock, as it displaces higher-emitting fuels.
“Global ammonia demand is forecast to double by 2050, with lower carbon ammonia making up
nearly two-thirds of total demand.4
“This Project exceeds our capital allocation framework targets for new energy projects. Both phases
are expected to achieve an internal rate of return above 10 percent and payback of less than 10
years.
“This acquisition is a material step towards delivering our Scope 3 investment and abatement targets.
Phase 1 has the capacity to abate 1.6 Mtpa of CO2-e and with the addition of Phase 2 the Project has
the capacity to abate 3.2 Mtpa CO2-e, or over 60 percent of our Scope 3 abatement target.”
OCI Clean Ammonia Project
The Project is located on the US Gulf Coast (Beaumont, Texas) and can serve customers
domestically and internationally. Phase 1 has a design capacity of 1.1 Mtpa and is under construction.
First ammonia production, derived from natural gas, is targeted for 2025. Lower carbon ammonia
production, derived from natural gas paired with carbon sequestration, is targeted for 2026 following
commencement of CCS operations.
Agreements for the feedstock and CCS capacity are in place. The nitrogen and lower carbon
hydrogen feedstock will be sourced primarily from Linde. The Linde feedstock facility is currently
under construction, targeting completion in early 2026. Ahead of completion, early supply of feedstock
for the Project will come from multiple suppliers, including Linde, from available capacity in the Gulf
Coast.
The CCS services will be provided to Linde by ExxonMobil and are expected to be available in 2026.
The Project will target conventional ammonia customers at start-up and will target lower carbon
ammonia customers in Europe and Asia when CCS is operational.
The facility is designed to accommodate a second 1.1 Mtpa production train (Phase 2). Phase 2
remains pre-final investment decision (FID). Woodside will target FID-readiness for Phase 2 in 2026
with an expected gross capital expenditure range of $1.2 - 1.4 billion.
The Project’s competitive advantages include:
• World’s first ammonia plant paired with auto thermal reforming with 95%+ CO2 capture. This
results in an emissions intensity of 0.8 tCO2-e/t NH3 relative to an unabated ammonia
emissions intensity of 2.3 tCO2-e/t NH3;
• Early-mover advantage in the growing lower carbon ammonia market;
• Utilises proven ammonia synthesis design incorporating learnings from OCI’s other
operational sites;
• Advantaged location on the US Gulf Coast with access to multiple sources of feedstock and a
deepwater port for international export;
• Capital efficient business model leveraging third-party feedstocks for hydrogen paired with
CCS, and nitrogen;
• Gross equity Scope 1 and 2 emissions of less than 0.1 Mtpa CO2-e, with potential to further
lower emissions with renewable power;
• Advantaged transaction terms that reduce project cost and schedule risk; and
• Scalability for a second train in Phase 2, with economics that benefit from common
infrastructure installed during Phase 1.
Returns
Phase 1 is expected to exceed Woodside’s capital allocation target of a 10% internal rate of return
(IRR) for new energy projects, including acquisition and construction costs. It is also expected to
achieve payback in less than 10 years. Phase 2 is expected to achieve improved returns leveraging
common infrastructure.
The Project returns benefit from:
• Lower cost - the Project was an early mover and secured attractive feedstock supply and
CCS services;
• High-confidence project cost - advantaged transaction terms reduce the project cost and
schedule risk;
• Property tax abatements - the Project has secured local tax abatement agreements;
• Regulatory incentives - the Project is positioned to deliver to markets in Europe and Asia
which are incentivised to source lower carbon ammonia; and
• Scalability - a future Phase 2 development that benefits from common infrastructure installed
in Phase 1.
Forecast IRR and payback period are a look forward from July 2024 and assume Woodside equity of
100% and include the acquisition price. Lower carbon ammonia price assumes an uplift to
Woodside’s internal unabated ammonia cost assumption. In 2025 the uplift is $0/t increasing to
~$120/t in 2034 (real terms 2024) aligned with the phase-in of the EU carbon border adjustment
mechanism (CBAM). Payback period is calculated from undiscounted cash flows from ready for start
up (RFSU).
Ammonia market
Lower carbon ammonia demand is forecast to grow through the energy transition. The current
ammonia market is nearly 200 Mtpa, of which approximately 80% is used for fertiliser applications
with the remainder used for various industrial applications. Lower carbon ammonia demand will be
driven by the decarbonisation of traditional end-use sectors and emerging applications in marine
fuels, power generation and as a hydrogen carrier.7
Europe and Asia are forecast to be the largest demand centres for lower carbon hydrogen and
ammonia driven by supportive policies. The EU CBAM imposes a levy on imports of carbon intensive
goods based on carbon intensity. This results in a carbon tax saving for lower carbon ammonia
relative to unabated ammonia. In Japan and South Korea, demand is expected to be driven by
supportive ‘contract for difference’ subsidy schemes, which aim to cover the difference between the
prices of lower carbon fuels and conventional fossil fuels. The Project’s designed carbon intensity is
expected to qualify for these schemes.
Transaction details
Under the transaction, Woodside will acquire 100% of the equity of OCI Clean Ammonia Holding B.V.,
which indirectly wholly owns the Project, from OCI N.V. (together with its affiliates: “OCI”).
The Project is subject to cost, schedule and performance guarantees from OCI. This means that OCI
will manage the construction of the Project through provisional acceptance, will fund Project costs
through Project completion and has agreed to liquidated damages for certain delays, reducing cost and
schedule risk.
The transaction includes the transfer of experienced personnel with start-up, operational,
maintenance and technical capabilities for the operation of the asset.
The transaction is targeted to complete in the second half of the 2024 and is subject to OCI N.V.’s
shareholder vote and satisfaction of customary conditions precedent.