Jong Chen Foo, Global Head of Ammonia, recently spoke with Nadim Chaudhry, CEO of World Hydrogen Leaders about our ammonia production and projects, growing demand for low carbon and renewable ammonia, and its application in hard to abate sectors like shipping.
Read a summary of their discussion below and watch the full interview here.
Nadim: Can you give us an overview of OCI’s ammonia production and projects?
Jong Chen: We are a global producer and distributor of renewable, low carbon and conventional (grey) ammonia. Our ammonia production is around 7 million tons, with 5 million tons being converted into downstream fertilizers and industrial chemicals. The remaining 2 to 2.5 million tons are traded on a merchant basis. We are committed to sustainability, both in our own operations and in providing low carbon and renewable products to help hard to abate sectors decarbonize. That’s why we’re actively pursuing our own sustainability goals, including a 20% reduction in carbon footprint by 2030, as well as constructing blue and green ammonia assets globally.
To give three brief examples, we are currently building a 1.1mtpa blue ammonia facility in Texas which will be the first greenfield blue ammonia facility of this scale to come onstream in the US and globally, as well as Egypt Green Hydrogen, Africa’s first integrated green hydrogen plant. In the Port of Rotterdam, Europe’s largest port, we are tripling the throughput at our ammonia terminal, which is the port’s only ammonia terminal, in anticipation of growing demand.
Nadim: With the growing interest in low-carbon products, how are you seeing the market react? Are there willing buyers for these products, and are they open to paying a premium?
Jong Chen: The existing markets, such as fertilizers and industrial chemicals, are indeed showing interest, particularly due to upcoming policies like the Carbon Border Adjustment Mechanism (CBAM) in Europe. This will likely lead to a gradual transition towards low-carbon products. We also see governments offering incentives, like Contracts for Difference (CfD) and infrastructure funding, to encourage the import of certified low-carbon ammonia. While the market is starting to respond, government endorsements and clear guidelines will be pivotal in driving these transitions and creating value in the market.
Nadim: When it comes to low-carbon projects, what are the challenges and risks you face, and how are you managing them?
Jong Chen: Similar to any significant industrial undertaking, low-carbon projects come with challenges. We are considering various scenarios internally, including potential premiums for low-carbon ammonia. The numbers differ based on manufacturing processes, whether green hydrogen, bio-based, or carbon capture and storage (CCS). In the future, we anticipate a multi-dimensional approach to carbon abatement, where various manufacturing methods will carry different costs. The challenge lies in aligning these processes with market demand and government incentives to ensure sustainability and profitability.
Nadim: You mentioned the increasing interest in methanol as a fuel to decarbonize maritime transport. Are you seeing this adoption trend as expected, and what is your outlook on ammonia adoption for similar purposes?
Jong Chen: The adoption of methanol for maritime transport has gained traction, particularly in the past year. The methanol marine orderbook is increasing dramatically and is set to accelerate further with increasing interest from the bulker segment as well as retrofits. As the world’s largest green methanol producer, we are leading the way. We are currently fueling the world’s first ever green methanol powered container ship on its maiden voyage with OCI HyFuels green methanol, in a pioneering partnership with Maersk.
“We view both methanol and ammonia as crucial fuels in the decarbonization pathway for shipping.”
While we have seen considerable progress in methanol utilization, the development of ammonia engines has been slightly slower than anticipated. We hope that engine development and regulatory guidelines will align more swiftly to catalyze the ammonia adoption process now that methanol has paved the way as an alternative marine fuel. The recent involvement of entities like the International Maritime Organization (IMO) in setting carbon emission guidelines is a positive step in this direction.
Nadim: As the ammonia market evolves, what role do off-takers play, and how is demand shaping up for these products?
Jong Chen: Off-takers are crucial in driving demand for these products. Currently, voluntary demand for large-scale off-take is limited without government incentives. However, some companies are stepping forward voluntarily to align with their sustainability goals. While the scale is not massive, these commitments are encouraging. Infrastructure development for bunkering and storage is equally important to spur demand, as is the clarification around definitions of low-carbon products. This clarity will help establish consistent values for carbon abatement, which will guide both producers and off-takers.
Jong Chen will be speaking at the inaugural World Hydrogen Derivatives, taking place in Rotterdam on 9-10 October 2023 as part of world Hydrogen Week. Find out more about the event here.
