Houston, 8 October (Argus) — State-owned ammonia producer Qatar Energy plans to commission its ammonia plant with carbon capture and storage (CCS) in April 2026, with initial output of 900,000 t/yr.
The 1.2mn t/yr Qatari project, known as Qafco 7, was first announced in 2022, with start-up scheduled for “the beginning of 2026”. Qatar Energy later indicated that start-up was more likely in the second quarter of next year.
The project will include a 1.5mn t/yr CO2 injection and storage unit with capital expenditure indicated at around 4.4bn rials ($1.2bn).
The global ammonia market is currently net short against demand by just over 100,000t, Argus estimates, owing to temporary outages or curtailments across the Middle East, north Africa, Trinidad and Tobago, and southeast Asia. But several capacity additions are anticipated to tip that balance into oversupply in 2026.
Gulf Coast Ammonia’s 1.3mn t/yr natural gas-based ammonia plant is expected on line imminently following over two years of delays. The plant last attempted a restart at the beginning of this month. And Woodside’s 1.1mn t/yr ammonia plant in Beaumont, Texas, is expected to start producing natural gas-based ammonia before the second quarter of 2026, while CCS-based hydrogen feedstock for that ammonia production could be available at a later point next year. Mitsui and Adnoc’s 1mn t/yr CCS-ammonia project in Ruwais, the UAE, could join these capacity additions in 2027.
This means that the ammonia market is looking at an additional 4.6mn t/yr of ammonia supply in total over the next two years, without firm evidence of similar growth in demand. This has left some producers fearing a price crash, unless substantial demand for new low-carbon uses such as marine fuels or power generation materialises in the next 4-5 years.
But a price crash would reduce profitability at older ammonia plants with high production costs, including some in Europe, where potential capacity closures of at least 1mn t/yr have already been indicated. Any further closures at high-cost plants would help rebalance supply and demand.
Qatar Energy could choose to direct Qafco 7’s output to downstream urea production, with a possible 6mn t of staggered urea expansion planned by 2030. But in the interim years, concerns persist over where the additional supply will be consumed in a potentially saturated ammonia market in the absence of closures, or significant new demand for low-carbon ammonia before 2030.
By Lizzy Lancaster
