CF Industries Holdings Inc. said Nov. 19 that it has received notification that the Evaluation Committee of the Block 88 Contractor Companies (B88CC) has selected its bid for a natural gas contract from Peru’s Camisea gas fields. The B88CC consortium is developing the Camisea gas reserves to attract economic development in the petrochemical industry (GM Nov. 5, p. 11-12; Oct. 29, p. 1). Notification was received from Pluspetrol Peru Corp. S.A., which is managing the bidding process on behalf of the consortium.
CF was to construct two world-class facilities: an ammonia plant with a nominal capacity of 2,100 mt/d, and a world-scale granular urea plant with a nominal capacity of 3,300 mt/d. Before commencement of work, CF would need to negotiate a natural gas supply agreement and complete necessary engineering, development, and financing arrangements. Board of directors and other approvals would complete the process.
“This is an important first step in the development of a project that we believe can provide important benefits to both the people of Peru and the stockholders of CF Industries. This complex would serve Peru’s domestic markets, as well as other markets in the region,” said Stephen Wilson, CF chairman and CEO.
“Strategically, it would be an important growth initiative for CF Industries, not only providing access to new, growing markets, but also diversifying our sources of natural gas for the company’s nitrogen fertilizer operations,” said Wilson. “While this is only the beginning of a multi-step process to bring this project to life, we are pleased that the Evaluation Committee has selected CF Industries, thereby expressing its confidence in our ability to execute this important economic development project,” he added.
CF expects to begin discussions on development of the natural gas supply agreement immediately. CF told Green Markets it was too early in the process to further elaborate regarding cost, timeline, or potential partnerships for the new complex. CF reiterated that there is much to do before this project can go forward.
CF has been seeking to expand and diversify within the fertilizer industry, as evidenced by its recent acquisition of 50 percent of the common shares in Keytrade AG (GM Sept. 24, p. 1). CF has since reported in SEC filings that the amount was $25.6 million, with an additional acquisition of certain non-voting preferred shares for $800,000. It also contributed an additional $12.8 million in subordinate financing. CF said the Keytrade stake would give it a global platform for marketing and sourcing fertilizer.
Terra Industries Inc. was also a contender for the gas contract in Peru (GM Oct. 29, p. 1; Nov. 5, p. 11-12). Had Terra and its partner Orica Ltd. won the contract, they were looking toward a $1 billion nitrogen plant at the southern port of Pisco, perhaps improving the construction timeline and costs by bringing in idled plants from Terra’s Donaldsonville complex.
According to the press in Latin America, other contenders included Protexa of Mexico; Enaex of Chile; a consortium led by India’s Oswal Chemicals & Fertilizers; and Petrobras of Brazil in partnership with Petroperu, the Peruvian state-owned oil company. All of these bidders were reportedly eyeing some sort of nitrogen complex, except for Protexa, which was looking at methanol.