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Australia’s Woodside Energy has closed its second deal for U.S. assets in weeks, agreeing to pay $2.35 billion to buy a low-carbon ammonia project in Texas from OCI Global.
The acquisition by Perth-based Woodside, Australia’s largest oil and gas developer, follows its $1.2 billion acquisition of U.S. liquefied natural gas developer Tellurian in late July.
The company is looking for acquisitions to boost its growth prospects and has said it wants to become a “global LNG powerhouse.” Woodside has roots in the 1950s and doubled in size in 2022 when it acquired BHP’s oil and gas division.
The deal means Woodside will expand its investment in ammonia, a compound used in fertilizers that has gained traction in recent years as a way to transport and store hydrogen. This has been billed as a way to decarbonize industries like trucking and shipping.
So-called blue ammonia is produced in the same way as traditional ammonia, using gas, but with the carbon byproduct captured and stored. Carbon capture technology is not developed on a large scale and has been criticized for increasing dependence on fossil fuels.
Several major oil and gas groups, including ExxonMobil, Saudi Aramco and Abu Dhabi National Oil Company, have invested in blue ammonia plants, betting that it will play a role in the energy transition.
The OCI plant in Beaumont, Texas, is one of the largest blue ammonia projects under construction and is expected to produce 1.1 million tons per year.
For OCI, the Amsterdam-listed chemicals and fertilizer empire led by Egypt’s richest man, Nassef Sawiris, the sale is part of a broad and ongoing dismemberment effort.
OCI’s board approved a strategic review of all business lines and its listing location in the Netherlands last year aVsceker Jeff Ubben, a U.S. activist investor, bought a 5 percent stake. It prompted the group to explore options, including asset sales to improve shareholder returns.
Ubben had cited the Texas ammonia project as one of OCI’s assets that could potentially attract interest from energy groups. It is expected to begin production next year.
Woodside will acquire the entire equity of the project, in a deal expected to close in the second half of this year.
Sawiris, whose personal assets include English soccer club Aston Villa, has already struck deals to sell other parts of OCI. Last December, the group agreed to sell two fertilizer interests for about $3.6 billion each to Adnoc and Koch Industries of the United States.
The Egyptian businessman told the Financial Times in a rare interview earlier this year that OCI could become a shell company pursuing acquisitions in new sectors.
In its 2023 year-end earnings, OCI said it would distribute at least $3 billion to shareholders this year.
OCI shares have fallen 17 percent this year, bringing their market value to €4.7 billion. Woodside shares have fallen 20 percent this year, and the company has a market value of $34 billion.
