Lotte Chemical Group - US Tollgrass, MOU for Clean Ammonia Supply

Lotte Fine Chemical - Lotte Chemical - Tolgrass
Supply of 500,000 tons of Clean Ammonia
Adding the US in addition to the Middle East and Southeast Asia

Kim Yong-seok, CEO of Lotte Fine Chemical (from the right), Damon Daniels, Chief Business Officer of Tolgrass, and Hwang Jin-gu, CEO of Lotte Chemical, are taking a commemorative photo after signing an MOU for clean ammonia supply at Lotte World Tower in Jamsil, Seoul. Photo by Lotte Chemical

(from the right)

[Asia Economy Reporter Jeong Dong-hoon] Lotte Group's chemical division announced on the 9th that it has signed a memorandum of understanding (MOU) with Tolgrass Energy, which is promoting a clean hydrogen and ammonia project in the United States, to supply 500,000 tons of clean ammonia (blue ammonia).

The 500,000 tons of clean ammonia secured through this agreement by Lotte's chemical division is about one-third of the current annual ammonia import volume in South Korea. In terms of value, with the current international ammonia price at around $900 per ton, this amounts to over 600 billion KRW.

This agreement is significant in that it secures a supply source in the U.S., in addition to the existing Middle East and Southeast Asia sources, in the competition to secure clean hydrogen and ammonia, which are carbon-free energy sources replacing fossil fuels. The supply will begin in 2027 from large-scale clean hydrogen and ammonia production facilities in the U.S. that Tolgrass is promoting in partnership with Equinor, the largest oil and gas company in Northern Europe.

Clean hydrogen and ammonia from the U.S. are expected to have higher price competitiveness compared to other regions. In fact, in August, the U.S. government increased tax benefits for carbon capture from the existing $50 per ton to $85 per ton to promote carbon capture, thereby strengthening support for related industries.

Kim Yong-seok, CEO of Lotte Fine Chemical, said, "This agreement is meaningful in that we secured a competitive supply source in the U.S., as well as the existing Middle East and Southeast Asia, to realize carbon neutrality," and added, "We will continue to lead the securing of a global clean ammonia supply chain through East Asia's number one ammonia distribution infrastructure."

Hwang Jin-gu, CEO of Lotte Chemical, stated, "Lotte's chemical division will maximize the core competencies of the companies within the division to contribute to the activation of the hydrogen ecosystem, including the production of clean hydrogen and ammonia."

Tolgrass is a U.S. natural gas energy company leading the transition to clean energy. It is jointly owned by global funds such as Blackstone, Spain's Enag?s SA, and South Korea's National Pension Service, and plans to promote clean hydrogen and ammonia projects based on abundant capital. Currently, projects producing clean hydrogen and ammonia are being announced one after another in the U.S., supported by low natural gas prices and active government policies. It is expected to become an important strategic supply source for the expanding domestic demand for clean hydrogen and ammonia in the future.

Meanwhile, Lotte Group's chemical division plans to produce 1.2 million tons of clean hydrogen by 2030 and distribute and utilize it. Last month, it actively pursued the import of overseas clean hydrogen and ammonia, including signing a contract to import 50,000 tons of clean ammonia, which was commercially produced for the first time in the world in Saudi Arabia, within this year.