Fertilisers play a critical role in ensuring the security of the global food supply. Urea – a nitrogen based fertiliser made using ammonia and carbon dioxide – is a very important chemical for farmers across the world. For 35 years, Adnoc Fertilizers, with its two plants based in Ruwais, in Abu Dhabi's western Al Dhafra region, has sold granulated urea to them. Overnight, this unit of the Abu Dhabi National Oil Company group has gone from the 12th-largest nitrogen fertiliser exporter in the world to the biggest. This is the result of its decision to form a joint venture with the regional operations of the Dutch company OCI. A Middle East champion has now been created that can be a world leader. This scale has also been achieved with minimum capital investment, thanks to a creative deal that recognises the incredible opportunity that can be harnessed by both Adnoc and OCI working together.
Based in the Netherlands and owned by Egyptian billionaire Nassef Sawiris, OCI has plants in Egypt and Algeria. After the merger, OCI will own 58 per cent of the new entity – which will be headquartered at Abu Dhabi's financial hub ADGM – with Adnoc holding a 42 per cent stake. Together, they will have production capacity of 5 million tonnes of urea and 1.5 million tonnes of sellable ammonia. Combined annual revenues are $1.74 billion. However, this figure will surely grow as the joint venture accesses new markets and pursues fresh acquisitions. They will also share know-how and R&D benefits. In recent years, the global fertiliser market has been hit by lower prices and more competition. Producers in the GCC, Asia and the Americas are vying with each other and only the most efficient, technologically enabled companies will win.
The partnership between Adnoc and OCI creates a new industry leader that benefits from access to long-term stable natural gas supplies in Abu Dhabi, and state-of-the-art infrastructure in the key ports of the Mediterranean, Red Sea and Arabian Gulf. Adnoc's chief executive Dr Sultan Al Jaber, who will be chairman of the new company, said that the deal will help attract new investors to the town of Ruwais, which is developing into a world-class petrochemicals hub. Adnoc's 2030 strategy includes diversifying its revenues away from a reliance on the sale of crude oil, in line with the UAE's overall economic plans. Expanding its fertiliser business on a global scale and increasing profitability will go a long way to helping to achieve that vision. It will also support the agriculture industry worldwide and play an important role in food security for future generations.
