LONDON – Yara, the world’s largest trader of ammonia, is bringing ammonia to Europe from production facilities in Trinidad, the United States and Australia to support fertilizer capacity after wholesale gas prices surged, its CEO said.
Yara, based in Oslo, has been forced to cut ammonia output in Europe by 40% due to the soaring gas prices which CEO Svein Tore Holsether had made ammonia production in Europe unprofitable.
Holsether told Reuters that it was impossible to say how long the high gas prices would last in Europe but that Yara was able to supply all of its customers with contracted volumes.
“Faced with record high gas prices, we actually have the flexibility in our system to switch off ammonia production: so rather than using European natural gas, we’re importing from our other facilities that are running at full blast,” he said.
“We are bringing in that ammonia into Europe so that we can maintain our fertilizer production at close to full capacity,” Holsether said by telephone from Oslo.
Natural gas is the most important cost input for nitrogen-based chemicals and fertilizers.
“Instead of using European gas, we are essentially using gas from other parts of the world to make that product and bring it into Europe.”
The cuts to European ammonia production follow similar action by rival CF Industries Holdings, which on Wednesday said it was halting operations at two British plants, citing high costs of natural gas feedstock.
“Everything is moving up but at the moment the nitrogen prices in Europe are at a level that does not justify the production of ammonia,” Holsether said.
“Longer term what we need in place is policy around continuing to develop more renewable energy to make it more resilient and we need a more value-chain approach to the food system which is so fragmented,” he said.