What drew you to OCI and what is your personal investment in the world of the fertilizer industry?
While at university, I was granted a scholarship from OCI, and this is how I began to get involved in the fertilizer industry. At that time, the company had just two plants. For the last 14 years, we have been on a growth journey in Europe, the United States and the Middle East. Coming from the financial world, I wanted to bring my contribution to something more impactful and tangible. Knowing that your company is providing the essential product (nitrogen fertilizers) to feed around 4 million people – half the world’s population, is highly fulfilling. But agriculture makes for 30% of global greenhouse gas emissions and, although it is no easy task, we must find the best ways to decarbonize this industry in an affordable way - without increasing the price of fertilizer and therefore the price of food too much.
What is the footprint OCI carries and what can be done to decarbonize this sector while still maintaining affordable pricing?
Scope 1 emissions are related to the use of hydrocarbons (mostly natural gas) to produce fertilizers. Within the industry, 60% to 90% of our cash cost is natural gas. Switching to renewable biogas is a sustainable (but expensive) alternative, with the price per MMBTU being $25 instead of the $2 of natural gas. In Texas, we are developing the only FID’d blue ammonia project in the U.S., currently under construction, enabled by the IRA's section 45Q program for carbon sequestration. The goal is to have it fully operational by 2025 and to decrease the CO2 produced from 2,2 tonnes from traditional processes to 0,6 tons of CO2 per ton of ammonia. Green ammonia is the final frontier in this space since it uses only water and renewable electricity, but it will take several years until it can be deployed at scale. OCI is already producing green ammonia in Egypt and, ultimately, we plan to expand production to Abu Dhabi, Europe, and the U.S.
Furthermore, in the Middle East we are using green energy to reduce the current 30mW consumption per site that leads to Scope 2 emissions.
Concerning Scope 3, fertilizer application on the farm is responsible for releasing greenhouse gases like N2O and NH4 into the atmosphere. Although these emissions are not our direct responsibility, as an upstream company we need to play our part in reducing them. We can do that by augmenting the fertilizers and adding sulphur or other inhibitors to improve the efficacy of the fertilizer and reduce the greenhouse emissions. Until the regenerative organic solutions or enzymes around nitrogen ramp up, we have to focus on viable ways through our own operations to reduce our impact on the environment.
What is your current global presence, especially in relation to the actual state of supply and demand?
We have a total of nine production facilities out of which three are in the U.S., two in the Netherlands and four in the Middle East. In terms of commercialization, the wholesalers and the retailers are the only layer between us and the farmers and we have a total capacity of 13 million tons of nitrogen and 3 million tons of methanol. The war in Ukraine subdued the demand in 2022 and led to increased grain prices, a decrease in exports of ammonia from Russia (although this has now recovered) and more expensive gas. The conclusion from this disruption is that the green transition needs to not only focus on sustainability but also on cost competitiveness and energy security. During this crisis, we are concentrating on bringing as much fertilizer product into the market as possible, especially to vulnerable geographies like Ethiopia, where we are the largest single supplier of urea. Over the last year we have seen less of nitrogen prices going down because of affordability issues, but, luckily, in the last three months prices have decreased considerably. A key focus for us is offering a low carbon product to our fertilizer customers by buying renewable natural gas at a premium so that our low carbon Nutramon product used in the Netherlands has a lower GHG footprint than it would if produced using traditional natural gas. Our recently announced partnership with AGRAVIS and Dossche Mills to produce a wheat flour using low carbon fertilizer is an example of how the sustainability benefits can pass downstream.
What are the main challenges for the whole agriculture industry given the necessity of a green transition and what portion of the responsibility do you take on?
Our fuel customers in the space of green methanol are willing to spend $1200 per ton due to renewable fuel standards in Europe and overall demand, driven by regulation. On the other hand, chemical and agricultural producers, even those with robust decarbonization plans in place, cannot afford this price, because the chemical and agricultural sector does not yet have a solid reward system in place. Going from zero to hero is noble, but we will not be achieving much in the next ten years without greater regulatory value for green products. . If we want to reduce emissions, we need to create an established system that can manage this highly complex context. . It falls on us, the incumbents, to force a green agriculture supply into the market and make the first steps towards progress, and even mistakes, so that we can pave the way to success.
What do you wish to achieve at OCI in the next twelve months?
Besides focusing on bringing our blue ammonia projects online as quickly as possible to scale our low carbon production, we are also aiming to create a value chain even before the public sector support comes our way. Developing an ecosystem that can tolerate decarbonization in a cost-effective way is essential, especially for farmers. Putting all the noise aside and just focusing on the practical solutions and actionable projects will allow us to look in the rearview mirror and see the amount of CO2 we took out of the atmosphere.
