OCI signs MoUs to develop ammonia and methanol as shipping fuels

Author: Richard Ewing

2021/03/05

LONDON (ICIS)--Dutch fertilizer major OCI on Friday announced the signing of two memorandums of understanding (MoU) as it seeks to commercialise ammonia and methanol as the "shipping fuels of the future".

The first pact is with MAN Energy Solutions (MAN) and Hartmann Gas Carriers Germany (Hartmann), under which OCI intends to charter ammonia vessels built, owned and operated by Hartmann and its commercial arm, GasChem Services. These vessels will be operated using ammonia engines designed by MAN.

"The partnership aims to propel the commercialisation of ammonia-fueled vessels and accelerate the energy transition and decarbonisation of the shipping industry," OCI said in a lengthy news release.

The second alliance involves MAN Energy Solutions and Eastern Pacific Shipping (EPS) and will target retrofitting existing vessels from EPS’ tanker fleet to use methanol and ammonia, as well as new-build methanol and ammonia-fuelled vessels.

"The technology to retrofit a vessel to accept methanol as a fuel is available today and the intention is for OCI to charter the first retrofitted methanol fueled vessel operated by EPS using already in-service MAN engines and technology in the next two years," OCI explained.

"Ammonia and methanol, OCI’s core products, are the only practical alternatives for long-distance shipping.

"With global infrastructure in place, these products can bridge the transition from 'grey' to 'green' until the industry has fully scaled up to products based solely on renewable energy sources."

OCI noted that, when compared to hydrogen and LNG, ammonia is widely used and easier to store with extensive global distribution and storage infrastructure in place.

Converting all long-distance shipping fuel to ammonia would require 750-900m tonnes/year of new capacity by 2050, 4-5 times the current total global ammonia production, OCI added.

For methanol, converting all long-distance shipping would require about 650-720m tonnes/year of new output by 2050, 6-7 times the current total global methanol production.

Brian Ostergaard Sorensen, VP and Head of R&D, Two-Stroke Business at MAN, said: “We view these initiatives as closely aligned with our own strategy of cooperating with external partners to develop sustainable technologies.

"Methanol and ammonia are very interesting candidates as zero-carbon fuels. In fact, we have already introduced a methanol-burning two-stroke engine, while we expect to deliver the first ammonia-fueled engine in 2024."

With ammonia and methanol production assets in North America, Europe and the Middle East & North Africa (MENA), OCI believes it is well placed to capture new opportunities in both products.

"[Nitrogen fertilizer producer] Fertiglobe particularly benefits from proximity to ample underutilised wind and solar generation capacity across the MENA, enabling stable production of green ammonia at a low cost," OCI said.

"By 2030, Europe will likely not produce sufficient green hydrogen to meet their needs and is expected to depend on imports with the MENA region the most competitive alternative."

Eastern Pacific Shipping CEO, Cyril Ducau, added: "Converting our existing conventional fleet to burn methanol creates a unique opportunity to continue lowering our carbon footprint significantly and rapidly.”

OCI CEO, Ahmed El-Hoshy, concluded "Our products are perfectly positioned to fuel the transition and we believe the push towards low carbon fuels in the coming years will be met with the adoption of both methanol and ammonia as industry standard.

"We see this as starting with the adoption of grey/blue methanol and ammonia and then shifting to green as production costs come down, customer appetites move towards green and regulations continue to develop.

"We are confident ... existing vessels can economically convert their engines to use our low-carbon products and help the industry meet its goals."

Any subsequent commercial agreements are subject to agreement on commercial terms and definitive documentation, the statement added.