The concern surrounding carbon dioxide (CO2) supply chain shortages continues in the UK and parts of Europe this week, with the industry working hard to mitigate the impact for its customers.
Against the backdrop of soaring natural gas prices and the squeeze this is putting on both the energy sector and various industries in Europe, widespread fertiliser plant closures have been confirmed.
Thursday (16th) saw CF Industries confirm the closure of its two plants in the UK in Ince and Billingham, due to the current pricing dynamics. No estimated timeline was given for operations to resume.
The following day, Yara International announced it is curtailing ammonia production at a number of its European sites, citing the record high gas prices and the impact on margins.
Including optimisation of ongoing maintenance, Yara will by this week have curtailed around 40% of its European ammonia production capacity.
gasworld’s prior understanding that Fertiberia, the Spanish fertiliser heavyweight, would be curtailing operations at some of its production sites, was then also confirmed.
Fertiberia management has reportedly decided to stop production at its Palos de la Frontera site from 1st October. Its Puertollano factory remains in a scheduled shutdown for ongoing investments.
Jennifer Willis‑Jones, Senior Markets Editor for Nitrogen and Fertilisers at CRU Group, exclusively told gasworld on Friday that, “The closure of fertiliser capacity in Europe due to soaring gas prices will curb supply of nitrogen fertilisers, which will have a knock-on effect on supply of CO2 in Europe.”
“In fact, looking at current gas prices and futures gas prices, nitrogen fertiliser plants in Western and Eastern Europe, as well as Ukraine, are currently in negative margins producing ammonia. As such, further plants closures are expected in these regions.”
Since then, gasworld learned that Ukraine’s OPZ is in the process of stopping all ammonia and urea production at its Odessa plant, due to high gas prices. The decision was made to shut one ammonia line and two urea lines on 18th September. Production is not expected to resume until the end of the year at the earliest.
‘Working closely with our customers’
The impact on CO2 markets is already making headlines across the UK and Europe, with UK government officials understood to have met with various industries and associations over the surge in natural gas prices and the knock-on effects.
Concerns have been raised over the impact of any CO2 shortages on the food sector, particularly by supermarkets and food producers.
Meanwhile, Business Secretary Kwasi Kwarteng is reported to have been personally involved in a number of high-level meetings on the looming crisis, not least with CF Industries Chief Executive Tony Wills over the weekend.
Nippon Gases Europe told gasworld today (Monday 20th) that the company is ‘working very closely with our customers to minimise the impact of the crisis’.
Nippon Gases is a leader in the production and distribution of CO2 in Europe, and owns four of the largest and most reliable production facilities across the continent, as well as having significant access to third-party production. The company operates 12 CO2 production facilities with nine CO2 storage terminals, three ships and 13 dry ice production facilities.
It brought on-stream a new £9.5m CO2 terminal in Warrenpoint, Northern Ireland at the end of 2020, a 2,500 tonnes capacity facilities that stores liquid CO2 for the food and drinks industry across Ireland. It was an investment that came soon after the great CO2 crisis of summer 2018 and the company confirmed to gasworld that, “The terminal clearly will help alleviate the impact of the UK outages in Ireland.”
An official source added, “Europe is witnessing historically high prices for natural gas and electricity. Gas prices are pushed up by the recovering demand with the easing of the pandemic (hopefully the easing of the pandemic in Europe will continue) and concerns over European natural gas storage filling levels ahead of the winter. Under these unprecedented circumstances, some companies, large consumers of natural gas, impacted by the current costs, are taking decisions that affect CO2 sources.”
“Nippon Gases is working and investing on strengthening its CO2 supply chain. We recently started up the Warrenpoint terminal to strengthen the supply situation in Ireland, we are right now building a new CO2 liquefier in a new source in Europe, and we are advancing fast in three additional projects to build three additional liquefiers in three new sources also in Europe.”