Woodside Energy (ASX:WDS), Australia's largest oil and gas developer, has announced its second acquisition of US assets within weeks. The Perth-based company has agreed to pay $2.35 billion for a low-carbon ammonia project in Texas from OCI Global. This follows Woodside's $1.2 billion takeover of the struggling US liquefied natural gas developer Tellurian in late July.
Woodside has been actively pursuing acquisitions to enhance its growth prospects and aims to become a “global LNG powerhouse.” The company, which traces its origins back to the 1950s, doubled in size in 2022 after acquiring BHP’s oil and gas division.
This latest deal allows Woodside to expand its investment in ammonia, a compound primarily used in fertilizers but increasingly seen as a method for transporting and storing hydrogen, which is considered key to decarbonizing sectors like trucking and shipping.
Blue ammonia is produced similarly to traditional ammonia using gas, but with the carbon byproduct captured and stored. While carbon capture technology is still underdeveloped at scale and faces criticism for extending fossil fuel reliance, several major oil and gas companies — including ExxonMobil, Saudi Aramco, and Abu Dhabi National Oil Company — have invested in blue ammonia facilities, betting on its role in the energy transition.
The OCI facility in Beaumont, Texas, is one of the largest blue ammonia projects currently under construction, with an expected annual production of 1.1 million tonnes.
For OCI, the Amsterdam-listed chemicals and fertilizer conglomerate led by Egypt’s richest man, Nassef Sawiris, the sale is part of a broader ongoing breakup plan. Last year, OCI’s board approved a strategic review of all business lines and its Netherlands listing venue after US activist investor Jeff Ubben acquired a 5 percent stake and urged the group to explore asset sales to improve shareholder returns.
Ubben identified the Texas ammonia project as one of OCI’s assets likely to attract interest from energy groups. The project is set to begin production next year.
Woodside is acquiring all equity in the project, with the deal expected to close in the second half of this year.
Nassef Sawiris, whose personal assets include English football club Aston Villa, has already made deals to sell other parts of OCI. Last December, the group agreed to sell two fertilizer holdings for about $3.6 billion each to Adnoc and Koch Industries of the US.
OCI’s end-of-year earnings report for 2023 stated it would distribute at least $3 billion to shareholders this year. Despite this, OCI shares have fallen 17 percent this year, giving it a market value of €4.7 billion. Meanwhile, Woodside shares have dropped 20 percent this year, with the company’s market value standing at $34 billion.
