CF Industries Holdings Inc. said Oct. 13 that it has signed an agreement for the supply of natural gas to its proposed nitrogen fertilizer complex in San Juan de Marcona, Peru.
“This agreement represents an important milestone in the development of our Peru fertilizer project,” said Stephen Wilson, CF chairman, president, and CEO. “An assured supply of natural gas under an advantageous pricing structure forms the foundation for this key growth initiative. We recognize the efforts of the consortium and are especially grateful for the support of the federal government of Peru throughout this process.”
Under the agreement, CF will purchase up to 99 million cubic feet of gas per day on a take-or-pay basis from a consortium in Peru that includes Pluspetrol Peru Corp. S.A., Pluspetrol Camisea S.A., Hunt Oil Co. of Peru L.L.C., Sucursal del Peru, SK Energy, Sucursal Peruana, Tecpetrol del Peru S.A.C., Sonatrach Peru Corp. S.A.C., and Repsol Exploración Peru, Sucursal del Peru. The purchase price for the natural gas used to produce petrochemicals at the facility will be based on an index price for urea. The agreement is subject to certain conditions, including completion of the facility and related infrastructure.
CF is currently in the midst of a front-end engineering and design (FEED) study and an environmental impact assessment for the proposed project, which are expected to lead to a final decision in early 2010.
CF said current rough estimates for the project are between $1.5-$2 billion, with the FEED study expected to produce a more precise estimate. The expected capacity is 910,000 mt/y of anhydrous ammonia and 1.3 million mt/y of urea. Most of the ammonia would be used to produce the urea, but a smaller portion would be available for sale to third parties.
CF was notified in 2007 that it was selected by the consortium to progress toward a final gas contract (GM Nov. 26, 2007). Terra Industries Inc., among others, was also a contender for the gas contract in Peru (GM Oct. 29, Nov. 5, 2007). Had Terra and its partner Orica Ltd. won the contract, they were looking toward a nitrogen plant at the southern port of Pisco.