India: NFCL New Urea Project

Hyderabad-based Nagarjuna group fertilizer company Nagarjuna Fertilizers and Chemicals Ltd (NFCL) is planning to expand its fertilizer facility in Kakinada, Andhra Pradesh, by setting up a 1.3 million tonne per annum brownfield urea project. This will take up the total capacity of the Kakinada plant to around 3 million tonnes per annum. The Kakinada facility currently has two plants making urea and ammonia with. The new expansion facility is slated to come up within the existing complex and NFCL is planning to invest over US$ 0.91 billion in the setting up of the new urea plant.

The company is already understood to have sought a 2.4 mmscmd (million metric standard cubic meters per day) gas allocation for the expansion project by 2014-15 and has applied for the necessary approvals for the same. NFCL, the flagship of Nagarjuna group that was set up in 1986-87, manufactures and markets plant nutrients under the Nagarjuna brand, and they are the single largest private sector investment in southern India. NFCL has also signed a MOU (memorandum of understanding) with Nigeria, which is Africa’s biggest oil producer and has the continent’s largest gas reserves, to build petrochemical and fertilizer plants in the southern Delta state and in Lagos, the commercial capital.


Russia: Uralchem increases ownership in Perm

Russian fertilizer maker Uralchem acquired in the beginning of the year an additional 41.2% of the shares of Perm Mineral Fertilizers (PMF) reaching a controlling interest of 87.7%. Uralchem is one of the largest producers of nitrogen and phosphate fertilizers in Russia. They are the second largest ammonium nitrate producer in the world and number one in Russia and the second largest nitrogen fertilizer producer in Russia.

Uralchem has capacities for the production of 2.8 million tonnes of ammonium nitrate, 2.2 million tonnes of ammonia, 0.8 million tonnes of complex fertilizers (NPK), 0.8 million tonnes of MAP and DAP and 1.2 million tonnes of urea per year. The company, which owns fertilizer plants at Kirovo-Chepetsk, Berezniki and Voskresensk, produced in 2010 10% more fertilizers compared to the previous year reaching nearly 4.9 million tonnes. In the 2011 Uralchem accounted for more than 16% of all Russian nitrogen fertilizers.

Uralchem was incorporated in Cyprus in May 2006. As at 31 March 2012 it was 95.5% owned by CI-Chemical Invest Limited, incorporated in Cyprus; the remaining shares were held by management. OAO Perm Mineral Fertilizers specializes in ammonia and urea manufacturing and the main products are primarily sold in the export markets. UralChem said first-quarter profit doubled as its acquisition of PMF boosted output. In the 1Q of 2012 they sold 204,000 tonnes ammonia as compared to 115,000 tonnes ammonia in the 1Q in 2011.

India: The Fertilizer Industry Demands More Natural Gas

The Indian fertilizer ministry wants to encourage new investments in the natural gas segment as the domestic consumption of urea is expected to go up by about 13% to 34 million tonnes in five years. The natural gas output from its most prolific field—Reliance Industries’ D6 field in the Krishna Godavari basin–is declining. Inadequate availability of gas is delaying many power and fertilizer projects. The previous policy to encourage investments helped in adding only 2 million tonnes of capacity as there was no certainty of getting natural gas at a steady price over the long term. Policy makers are hoping to address this hurdle by giving pass through status to gas price. Compared to the domestic price of US$4.2 per million metric British thermal unit (mmBtu), imported LNG is available at about US$15-18 a unit. While the domestic gas production is declining, the fertilizer sector’s requirement will go up by 65 million metric standard cubic metres a day by 2014-15. As of now, fertilizers get top priority in the natural gas supply, followed by the city gas distribution sector. Power sector, the biggest consumer of gas in India, comes third on the priority list for gas allocation despite its critical role in the national economy.

There are different roads to increase India’s natural gas supply.

India has asked the USA to supply it with liquid shale gas, as it continues to reduce dependence on oil imports from Iran, which is targeted by sanctions from Washington due to its aggresive nuclear ambitions. India has pledged to continue reducing imports from Iran, which used to be its No. 2 supplier after Saudi Arabia, but as far as we know no specific target has been set yet. Shale gas development in the United States has turned the gas market there from shortage to glut, and cheap US LNG export projects are soon expected to provide stiff competition for Australian LNG export developments. The US Energy Information Administration estimates that China holds the world’s largest shale gas reserves, with 1,275 trillion cubic feet, followed by the United States at 862 trillion cubic feet.

Another supply road could come from Turkmenistan through a 1,700 km cross-border pipeline passing through Afghanistan and Pakistan. While the transportation charges for gas would be decided by the consortium of companies that would construct the Turkmenistan-Afghanistan-Pakistan-India (Tapi) pipeline, India would pay a US$0.50 per million metric British thermal unit (mmBtu) transit fee to Afghanistan and Pakistan for letting gas through their territory. In spite of this charges charges, the price India would pay to the supplier is expected to be lower than the US$14-16 per unit of gas now available in the global spot market. India is estimated to get 38 mmscmd and state-owned gas transporter Gail India would lift the gas for the local consumers.

Canada: New Nitrogen Complex Joint Venture

Indian Farmers Fertiliser Co-operative Ltd (Iffco) wholly owned Dubai-based subsidiary, Kisan International Trading FZE, and a Canadian partner, are setting up a gas-based ammonia-urea complex in Canada. The complex is likely to be located in eastern Canada and will comprise two ammonia units, a couple of urea plants, and a dedicated jetty for export. The envisaged initial capacity for two single-stream ammonia plants would be 2,200 tonnes a day each. The urea plants will have a capacity of around 4,000 tonnes a day each (which may have two sub-streams). The proposed jetty would have to handle ammonia at a throughput of 1,000 tonnes an hour and urea at 1,200-1,500 tonnes an hour. Construction work is expected to take three years.

Ghana: Negotiations on Nitrogen Fertilizer Plant J-V

In 2010 the governments of Ghana and India signed a Memorandum of Understanding (MOU) for the setting up of a fertilizer plant in Ghana’s western region, where gas and oil are available from commercial production. Both governments are working hard to conclude the deal, and it has been hinted it could be reached the final agreement by the end of the current year. India’s overseas attempts in promoting foreign fertilizer ventures, is driven by India’s cabinet, on May 19th, 2011, more than doubled the price of gas sold to makers of fertilizer. Mumbai-based IFFCO (Indian Farmers Fertiliser Cooperative Limited), the country largest fertilizer seller, plans to secure fuel for the project from Ghana Oil Company. Estimated Ghana oil reserves have jumped to almost 700 million barrels.

The plant, when established, will have the capacity to produce one million metric tonnes of fertilizer. Mumbai-based Rashtriya Chemicals & Fertilizers Ltd., India’s biggest state-run urea maker, is involved in the implementation of the project.

India is one of the major trading partners of Ghana, which is the world’s third-largest cocoa producer, and the second global exporter. Agriculture accounts for roughly one-quarter of the GDP of Ghana and employs more than half of the workforce, mainly small landholders. Among the important constraints to increased fertilizer use are inadequate and expensive credit, unsatisfactory marketing arrangements for the produce, the relatively small area under irrigation, insufficient funding of agricultural projects and inefficient use of fertilizers by farmers. Only 0.2 percent of the cultivated land is irrigated whereas several large irrigation schemes are underutilized.

India: ONGC to set up urea manufacturing unit

Last year the oil giant Oil and Natural Gas Corporation Ltd (ONGC) discovered huge gas reserves at Khobal, near the Assam-Agartala National Highway (NH-44). Last April ONGC official authorities stated they had decided to set up a urea fertilizer manufacturing unit in North Tripura district, in the border with Bangladesh. The region has nearly 70,000 hectares of gross area under cultivation. With the commissioning of the project the demand for urea fertilizer will be met not only for Tripura but also for the entire north-east region and a large chunk of the fertilizer could be exported to the neighboring Bangladesh. The site for establishing the project has been selected at Khobal considering close proximity to the Khobal gas field from where the natural gas (hydro carbon) would be supplied. At least six big investors expressed their interest in the funding of the fertilizer project.

India: New Nitrogen Factory Planned in Burdwan

The Matix Fertilisers and Chemicals Ltd. has acquired land for the setting up of a nitrogen fertilizer plant at the Panagarh Industrial Park in Burdwan district, West Bengal. The company is expected to start commissioning the production unit sometime in 2013, and, in a first phase, it is likely to meet West Bengal’s demand for nearly 1.3 million tonnes of urea. The capacity is expected to become 3 million tonnes of urea by 2014. The fertilizer unit will use coal bed methane (CBM) as feedstock, and the cost of the project is of nearly one billion US$.

The total Indian urea production stood at 22 million tonnes in 2010-11, as against the annual demand of 28-29 million tonnes. The gap of 6-7 milion tonnes is met through imports. The Indian fertilizer ministry estimates say that by 2016-17, this demand could touch 34 mt.

Belgium: EuroChem acquired BASF fertilizer capacities in Antwerp

The world leading chemical company BASF has completed the sale of its fertilizers activities in Antwerp, Belgium, to Russia’s largest mineral fertilizer maker, EuroChem, as of March 31, 2012, as planned. The appropriate antitrust authorities have given their approval for the transaction. The total purchase price amounts to around €830 million, including a deferred part of circa €130 million payable over the period 2013 to 2016. This transaction will lead to an expected pre-tax disposal gain of approximately €600 million for BASF in the first quarter of 2012. EuroChem is one of the top twelve global agrochemical companies by nutrient capacity, producing primarily nitrogen and phosphate fertilizers, as well as certain organic synthesis products and iron ore. They rank #6 in the global capacities of tradeable ammonia and #7 by capacity of tradeable phosphoric acid. In 2011 they accounted for a fourth of Russia’s nitrogen market and a fifth of its phosphate market. They have over 900 million tonnes of proven and probable potash reserves.

The scope of the transaction includes plants for CAN/AN fertilizers (calcium ammonium nitrate/ammonium nitrate), NPK fertilizers (nitrogen-phosphate-potassium) and nitrophosphoric acid as well as three related nitric acid plants. The activities were carved out into a separate company, now named EuroChem Antwerpen NV. About 330 employees have been transferred to the new company.

The EuroChem Antwerpen facilities include 2.3 million tonnes of NPK and CAN/AN; they are surrounded by the Scheldt and Scheldt-Rhine Canal and have access to jetties providing infrastructure for fertilizer distribution and for raw material acquisition via the North Sea and the Rhine River. EuroChem Antwerpen is now one of the largest fertilizer complexes in Europe and it will expand EuroChem share in that market in 3%.

Russia: Acron Expands Nitrogen Capacities

Acron, a leading Russian and global mineral fertilizer producer, will spend US$400 million by 2015 to build an ammonia plant with a 700,000 tpa capacity at its main production site in Velikiy Novgorod after opening on March 31 a US$95 million urea factory that can process 335,000 tons, boosting capacity almost 75 percent. Acron, which is controlled by Russian billionaire Viatcheslav Kantor, has a diversified product portfolio consisting of multi-nutrient fertilizers such as NPK and bulk blends, and straight nitrogen-based products such as urea, ammonium nitrate and UAN.
Acron has three production facilities – Acron (Veliky Novgorod, Russia), Dorogobuzh (Smolensk Region, Russia) and Hongri Acron (Shandong Province, China). Acron’s logistics and transportation capabilities include its own fleet of railway cars and three sea port trans-shipment facilities on the Baltic Sea – at the Kaliningrad port of Russia, at the Estonian Sillamäe port and at the Estonian Muuga port. The Group operates distribution networks in Russia and China.
Acron plans to enhance its vertical integration and secure supplies of phosphate and potash inputs through the development of its own mineral resource base. The Group owns licences to develop two apatite-nepheline ore deposits in the Murmansk region and a potassium-magnesium salts deposit in the Perm region (both located in Russia).

Bangladesh: New Urea Capacities

At present there are in Bangladesh six factories but most of them are old and their production capacity has fallen. But recently the authorities have disclosed that the government had taken initiatives to set up three more fertilizer factories to meet the growing demand for the agriculture input. The country spends a huge amount of foreign currencies to pay for the 1.5-2.0 million tonnes of fertilizers that are imported yearly to meet the demand.
Once completed, the Shahjalal Fertiliser Factory in north-eastern Bangladesh, will be able to reduce the import of around 0.6 million tonnes of urea a year. The production target for the Shahjalal Fertiliser Factory was fixed at 581,000 tonnes a year to meet the growing demand for urea fertilizer. The complex will be built adjacent to the existing Natural Gas Fertilizer Factory and comprise units designed to produce 1,000 mt/day of ammonia and 1,760 mt/day of urea. It will be built by China Chengda Engineering Co. (Chengda) and China National Import & Export Corp. (Complant). KBR will provide its ammonia technology, and Stamicarbon, a subsidiary of Maire Tecnimont, will supply its Urea2000Plus technology and services for the urea plant. The urea granulation unit will be based on Stamicarbon’s fluid-bed granulation technology. Start-up is due in 2015. Chengda is providing basic and detailed engineering and procurement; Complant is responsibile for construction and commissioning. The construction work will be completed by the next 38 months. We lack information about the other factories.

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