Norwegian fertilizer producer Yara International and Germany's BASF plan to build a world scale ammonia plant at BASF's site in Freeport, Texas, using hydrogen as raw material.

The facility with a capacity of about 750,000 t/y and set to go on stream by the end of 2017, will be operated as a 68:32 joint venture of the Norwegian and German groups. Each of the partners will draw ammonia from the plant in accordance with its equity share.

Yara and BASF said the hydrogen technology, compared with a traditional natural gas-based ammonia plant, will reduce capital spending, maintenance costs and carbon dioxide emissions "significantly."

The project will further strengthen Yara's position in the global ammonia market and increase its footprint in the US, said Torgeir Kvidal, the group's president and CEO.

Through the joint investment, BASF will be able to take advantage of world-scale production economics and the attractive raw material costs in the US and thus strengthen its integrated site at Freeport and the polyamide 6 value chain in the region, said managing board member Wayne T. Smith, who is responsible for the Chemicals segment.

Total capital investment is estimated at $600 million. Yara will additionally build an ammonia tank at the BASF terminal bringing the Norwegians' total investment to $490 million. BASF will also upgrade its current terminal and pipeline assets.

A long-term supply agreement for nitrogen and hydrogen has been signed with US industrial gases giant Praxair, linking the feedstock variable cost to the advantageous natural gas prices available at the US Gulf coast, the partners said.

Houston, Texas-based KBR has been awarded a fixed price turnkey contract for the engineering, procurement and construction. Yara will oversee construction of the plant while BASF will operate the plant and the export terminal.