Lotte Chemical, CIP to join hands on ammonia projects

South Korea’s Lotte Chemical Corp. has reached a preliminary agreement with Copenhagen Infrastructure Partners (CIP) to purchase and sell blue ammonia from green energy production facilities managed by the Danish investment firm.

Under their memorandum of understanding agreement, they will discuss and finalize agreements for the supply, purchase and sale of blue ammonia from the St. Charles project in Louisiana and green ammonia from CIP’s Murchison project in Australia, the greenfield renewable investment firm said on Tuesday.

The St. Charles project is designed to produce about 2.8 million tons of ammonia annually. CIP holds a majority stake in the US project, which will be operational from 2027.

Murchison is a new large-scale project in Australia with a capacity of up to 5,000 megawatts. Using wind and solar power, it will convert renewable electricity into hydrogen and ammonia for export purposes.

Lotte and CIP will also initiate discussions on the development of and investments in low carbon ammonia projects on a global basis.

They may discuss potential collaboration on projects in infrastructure bunkering and other sectors in connection with low carbon ammonia, CIP said.

“With the Korean government’s strong policy support on energy transition, Korea will be the fastest growing market for clean hydrogen and ammonia,” Hwang JinKoo, Lotte Chemical's chief executive and head of its hydrogen business group, said in a statement released by CIP.

“We believe blue and green ammonia will co-exist for many years as we gradually transition from fossil-based production. And we continue to see significant opportunities for both in the US., Europe and Asia,” said CIP Partner Søren Toftgaard.

“We … consider it an important step that could open further opportunities for our Energy Transition Fund,” Toftgaard added, referring to the MOU signed with Lotte Chemical.

Blue ammonia is produced from natural gas and emits less carbon than fossil fuels. Green hydrogen is the cleanest variety as it uses renewable energy to produce hydrogen from water.

Lotte has been pivoting toward hydrogen energy, shifting from its mainstay petrochemicals. In 2021, it announced a plan to generate green hydrogen at overseas facilities and bring it to Korea for industrial use.

CPI specializes in greenfield renewable energy investments. It focuses on offshore and onshore wind, solar photovoltaics, biomass and other clean energy. It has raised 28 billion euros ($30.4 billion) in 12 funds to invest in energy and associated infrastructure.

Write to Hyung-Kyu Kim at khk@hankyung.com

Yeonhee Kim edited this article.