Abu Dhabi has led the Middle East, if not the world, in its farsightedness with regard to building new oil and gas production infrastructure over the past nine months, taking advantage of falling materials costs and preparing for rising oil prices. Now, it is showing the same forward thinking when it comes to fertilisers.
In September, three international engineering companies bid for a contract to upgrade Abu Dhabi’s Ruwais Fertiliser Industries (Fertil) ammonia and urea capacity. The $1bn-plus deal, which contractors expect Fertil to award by October, is the first major fertilisers project to go ahead in the Middle East in 2009.
The lack of interest in new capacity is understandable in the current market. Demand and prices for food and fertilisers have plummeted since record highs in 2008. Demand for cereal crops is down 1.5 per cent so far this year, with consumption of fertilisers falling 5 per cent in the first half, according to the Paris-based International Fertilisers Association (IFA).
This slump is likely to be short-lived, however. The IFA forecasts that demand for food will rebound in the coming years and that the world will need 187 million more tonnes a year of fertilisers by 2014.
The Middle East, with access to cheap gas feedstocks, is a strong candidate to meet growing global demand. In a more stable economic climate, food security will become a key issue once again, and companies such as Fertil will be able to reap the benefits they have sown.