Rising costs, equipment delays stall green and low-carbon ammonia FIDs: Fertiglobe CEO
By Anoop Menon
Rising construction costs, longer equipment procurement lead times and supply-chain disruptions are complicating green and low carbon ammonia investments, and preventing final investment decisions (FIDs), according to Fertiglobe CEO Ahmed El-Hoshy.
Speaking at a panel session on hydrogen at ADIPEC 2026 in Abu Dhabi, El-Hoshy El-Hoshy said rising demand from artificial intelligence (AI) infrastructure and electrification had made equipment such as high- and medium-voltage switchgear and transformers unexpected critical-path items for projects, alongside compressors.
Equipment that was previously available within six weeks could now take 40 to 70 weeks to procure, he said, adding that construction and equipment costs had continued to increase contributing to project delays.
El-Hoshy said in the Gulf region, disruptions linked to the Strait of Hormuz had added another layer of uncertainty to project execution, affecting equipment deliveries and access to services and utilities.
“The knock-on effects reach well beyond the Arabian Gulf, and I think that's been a bit of a surprise,” he said, citing a Fertiglobe project in Egypt that experienced an eight-week delay after equipment was held up outside Salalah Port in Oman.
“It's also a continual reminder of the importance of resilience to deal with outcomes and tail risks that you always put in the background,” he noted.
Ruwais project on track
Despite these challenges, Fertiglobe is advancing its 1 million tonnes per year low-carbon ammonia project – called Project Harvest – located in Ruwais, Abu Dhabi.
“We've been working on it for the last two years. It starts up later next year (2027),” El-Hoshy confirmed.
The project, which is being developed in partnership with Mitsui, GS Energy and TA'ZIZ, has been under construction since the fourth quarter of 2024.
Fertiglobe had previously stated that total project capex is competitive at less than $500 million, with investments focused on building a back-end ammonia plant only, leveraging existing infrastructure and over-the-fence feedstock.
El-Hoshy said smaller projects that can “piggyback” on existing infrastructure “that might be grey, and bring in blue and green,” progressively offered a more practical approach as developers struggled to secure sufficient demand for large-scale projects.
“That lets you get the technology in faster,” he said.
He noted that large projects have faced challenges in integrating electrolysers, utilities and balance-of-plant systems efficiently.
Building something extremely large from scratch with no other revenue stream is “very binary,” since everything depends on a multi-gigawatt electrolyser working, he explained. Higher interest rates, a knock-on effect of the conflict, mean investors want to see returns earlier.
“From our perspective, leveraging an existing site is great: green electricity in, green molecules out, whether green ammonia, green methanol or e-LNG. We think that's the way to do it.”
Carbon pricing will level the field over time, he added.
Supply chain resilience
El-Hoshy said the disruptions in the Strait of Hormuz remain a concern for global fertiliser supply chains, noting that 30 percent of globally traded urea and 47 percent of global sulphur flows through the Strait. Approximately 40 percent of Fertiglobe's production is located inside the Strait of Hormuz.
He credited the company’s diversified production footprint, including production in North Africa and ADNOC’s logistics teams and partners, for helping the company manage supply chain challenges and delivery to customers.
Fertiglobe’s production capacity comprises 6.6 million tonnes of urea and merchant ammonia, produced at four subsidiaries in the UAE, Egypt and Algeria, making it the largest producer of nitrogen fertilisers in the Middle East and North Africa (MENA).
Partnerships matter
El-Hoshy said partnerships between companies with complementary competitive advantages would be essential to bringing the next generation of green or low-carbon ammonia projects to FID.
He cautioned that efforts to achieve national self-sufficiency could result in projects being developed in locations that were not economically optimal.
“I think you want to look for a Pareto-efficient solution, where you get multiple parties involved so you can bring down costs, which is possible.”
“What helps projects get big and successful is looking at where the best outcome is, who we can partner with, who takes on which risk, and who is best placed to handle it,” he concluded.
(Reporting by Anoop Menon; Editing by SA Kader)
(anoop.menon@lseg.com)
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