Middle East becoming fertiliser production hub

Gulf region emerging as major player in chemical fertiliser industry

QAFCO's bustling fertiliser export facilities.
QAFCO's bustling fertiliser export facilities.
NEWS, Downstream, Fertiliser plant, Petrochemicals Middle East
Henrik Larsen, general manager, Haldor Topsoe
Henrik Larsen, general manager, Haldor Topsoe
NEWS, Downstream, Fertiliser plant, Petrochemicals Middle East
Mohamed Al Rashid, general manager, Fertil.
Mohamed Al Rashid, general manager, Fertil.

With more mouths to feed around the world every year, demand for fertiliser will remain firm. Right now the Middle East is emerging as its largest global production hub

The chemical fertilisers industry plays a central role in literally feeding the world’s ever-growing agricultural demands. By increasing the production of food for the survival of both man and beast, fertiliser producers facilitate food security, with all its obvious essential knock-on effects.

“It is a very important industry for the human race, it is our fuel and it is vital for agriculture,” says Mohamed Al Rashid, general manager of Abu Dhabi’s Ruwais Fertiliser Industries, better known as Fertil.

The basic elements for a chemical fertilisers industry in the Middle East are apparent, with the large amounts of raw materials such as natural gas (mainly methane and sulfur), and phosphate stone.

The fertiliser production industry in the region dates back to the end of the 1960s and was the first downstream industry to be developed in the region. The first company to produce chemical fertilisers in Saudi Arabia was Saudi Arabian Fertilizer Company (SAFCO), now a subsidiary of SABIC, which was commissioned in 1969 with a production capacity of 200 000 t/y of ammonia and 330 000 t/y of prilled urea yearly. A second fertiliser company in Saudi Arabia, Al-Jubail Fertilizer (SAMAD) went on stream in 1983 with a production capacity of 500 000 t/y of urea. The National Chemical Fertilizer Co. (Ibn Al-Baytar) was commissioned in 1989.

SAFCO has since undertaken several capacity expansion programmes, reaching 5.3 million t/y following the start up of SAFCO 4 in April 2007, propelling the company to its current status as one of the largest producers of urea in the world.

A similar story can be found in Qatar, where Qatar Fertilizers Company (QAFCO) was established in 1969. The company has conducted many expansion projects, and today it is the world’s largest single site producer of urea and ammonia, with an annual production capacity of 2 million t/y of ammonia and 2 million t/y of urea. “We currently produce 3 million t/y of fertiliser,” says Yousef Al Kuwari, marketing manager at Qafco. The company is revamping its production capacity to strengthen its position. “Qafco 5 will go on stream in 2011, and Qafco 6 will be in 2012,” he adds.

The region has now become the global hub of the fertiliser sector, recently wrestling the position from Tampa in Florida.

The major reasons for this increase in MENA region capacity, especially during the last seven years, is the ample availability of gas, the abundance of raw materials such as potash and phosphate and the high demand of fertiliser in (relatively) nearby South and East Asia.

“The market is there, there is a huge demand on fertiliser from all over the world,” says Dr Abdelhafid Feghouli, vice-president of downstream activities at Sonatrach. The Algerian state energy giant has launched three fertiliser projects in joint ventures with the Egyptian firm Orascom Industries, Suhail Bahwan from Oman, and a third project with the Spanish company Fertiberia.

Ammonia to Urea

The ample availability of feedstock in the region, coupled with government strategies to develop agriculture, has pushed Middle Eastern countries to increase their production capacities.

“Most of the new fertiliser projects are near resources,” says Giorgio Greco, refinery and petrochemicals platform manager for GE Oil & Gas. “Whether in Qatar, Algeria, Saudi Arabia or Libya, the availability of feedstock was the main driver of these projects,” he adds.

The majority of fertiliser producers focus on producing granular urea and ammonia using methane feedstock. “We are enjoying low cost of methane feedstock that we receive from our parent company ADNOC,” says Al Rashid.

Methane gas is used to produce ammonia which is converted into granular urea. “There is big demand on granular urea, as it contains 46% nitrogen, which is the element for amino acid and protein,” explains Al Rashid.

Technology

Recently, many firms have stopped the production of prilled urea and focused on granular urea as modern licensed technology is better suited to granular production, matched by a bigger demand.

“We used to produce prilled urea, but now we are producing only granular urea as the old process system of prilled urea effectively vanished,” says Al Rashid.

One of the major fertiliser technology providers in the region is Danish firm Haldor Topsoe. “We provide the licensed technology and catalysts for the ammonia plants and work with reputed licensors for urea procution also,” says Henrik Larsen, general manager at Topsoe Middle East. The company provides technologies for fertiliser companies in Algeria, Iran, Saudi Arabia, Qatar and many other producers in the Middle East.

“We are involved in the vast majority of the fertiliser complexes in the region, either as a licensor or as a catalyst supplier,” says Larsen. “SABIC is one major client, in Oman we have just started up our third big ammonia plant there. Looking into 2010, our involvement with Qafco will increase significantly with the addition of the two 2200 metric tonne per day of ammonia trains in the Qafco 5 project,” he explains.

Challenges

There are many challenges facing the fertiliser industry, despite the fact it is so crucial to the agriculture sector.

Competition from North African producers is the major issue facing GCC producers. “North African producers are enhancing their position in the market which will enflame the competition,” explains Al Kuwari. “High import duties in Europe are another challenge,” observes Al Kuwari.

Raising awareness of the importance of the sector is another challenge presented to fertiliser companies in the region. “It is a big challenge to convince people, on an international level, to focus on fertiliser production, it is a big challenge as they often give higher budget allocations to other industries,” says Al Rashid.

Market

Fertiliser demand can be linked to populaton figures, so with the world’s population rising, there has been a continuous increase in demand. “There is growth in demand, and I tend to link the growth of fertiliser with the growth of population. There will be always be growth within our industry to satisfy the population increase,” says Al Rashid.

Some government decisions have also added to the pressure on demand. China imposed in April 2008 a 135% tax on urea exports from the country, as it aimed to secure enough supply for its internal market. This move had a follow on effect on global urea prices, which increased to more than US$550 per tonne.

Major fertiliser producers such as SAFCO and QAFCO have replaced Chinese exporters in regions which used to be dominated by Chinese exports.

With more mouths to feed each year, the regional, and wider global fertiliser industry appears to have proved itself relatively recession proof. “The year actually started with uncertainty regarding the ability to meet surging demand,” says Dr Faghouli.

New projects in the region have not been subject to the cancellations and delays seen by other downstream production plants. “At the moment there are ongoing new projects in Saudi Arabia, Abu Dhabi and Qatar.

Bahrain is ready to join the list in the near future. If you look outside the GCC, you will find several planned and ongoing projects in the gas rich countries like Iran, Egypt and Algeria also,” explains Larsen.

In the modern age fertiliser production is an absolute necessity, and as such, confidence is surging through the sector in this region.

“Demand for fertilisers is expected to remain firm as long as human beings remain on earth,” Al Rashid concludes.

Major Technology licensors
Urea: Saipem (Italy), Stamicarobon (Holland)
Ammonia: Haldor Topsoe (Denmark), Uhde (Germany)

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