The global ammonia trade is poised for significant expansion in the coming years, likely bolstering demand for natural gas, the main feedstock for conventional production.

The existing ammonia market is dominated by requirements for fertilisers, demand for which is projected to increase alongside population growth. But new applications for ammonia as a low-carbon energy source, hydrogen carrier and alternative marine fuel could also spur significant additional demand, potentially further boosting gas consumption too.

c.36m Btu – Gas requirements for 1t of ammonia for a typical plant

Ammonia is a large, gas-intensive industry, which the IEA says uses around 170bcm/yr, or roughly 20% of global industrial gas demand. Around 70% of ammonia output is for fertilisers, with the rest going to the production of plastics, explosives and other chemicals.

The IEA projects that under the "stated policies scenario”, global ammonia production will increase by nearly 40% by 2050, “driven by economic and population growth”.

A typical plant requires roughly 36m Btu of gas to produce 1t of ammonia. The Ammonia Energy Association expects 30.6mt/yr of low-carbon ammonia production capacity to be online by 2030, which—assuming the same efficiency and that all of that capacity is gas-fed—would imply 1,102t Btu, or 32bcm of feedstock. 

Gas to continue to dominate production

Conventional ammonia — also known as grey ammonia — is produced through the Haber-Bosch process, and while some coal-based capacity remains—particularly in China—the overwhelming bulk of production is heavily dependent on natural gas as a feedstock.

Blue ammonia is produced in the same manner as grey, with the addition of CCS, making the output eligible to meet various regulatory efforts to curb emissions, particularly the EU's Carbon Border Adjustment Mechanism and International Maritime Organization (IMO) targets. The IMO recently set out ambitious decarbonisation goals for shipping, with many in the sector expecting that conventional marine fuels will give way in the coming years to a mixture of LNG, methanol and ammonia. Classification society DNV has previously predicted that maritime ammonia demand could climb from around 2.3mt/yr in 2030 to 245mt/yr by 2050.

Meanwhile, green ammonia—produced from renewable energy and electrolysis—remains stalled everywhere except China, where significant capacities are under development or already in operation, especially in Inner Mongolia. The recent Trump administration decision to bring forward the expiration date for the 45V hydrogen tax credits to 2028 rendered many US green ammonia-hydrogen developments uneconomical. And while other regions are exploring the process—including Saudi Arabia, Spain, Namibia and Chile—most green developments remain years away. 

Blue ammonia may therefore be a factor that helps to sustain natural gas demand in the coming decades, even if direct use of methane as an energy source does eventually dwindle. And in the shorter term, the existing ammonia market provides a potential safety net for blue developers, who will be able to sell to fertiliser and chemical firms—albeit likely at a higher cost—regardless of potential future regulatory uncertainty.

Major projects

Major blue ammonia projects are concentrated in regions with ample, low-cost gas, specifically the US Gulf and the Mideast Gulf.

US projects were recently boosted by the government’s decision to keep its 45Q carbon tax credits scheme in place, securing those funds for projects that start construction before 2033 and greatly supporting the economics of blue ammonia developments.

Indeed, just after the US Senate passed the One Big Beautiful Bill Act, Chevron applied for those tax credits to build a multi-billion dollar low-carbon hydrogen and ammonia plant in Port Arthur, Texas. 

LNG giant Woodside expects its 1.1mt/yr blue ammonia plant in Beaumont, Texas, to start production this year, albeit initially without carbon capture. The firm has previously stated that it expects to use around 95m Btu/d per phase of the project.

Another blue project, the Texas-based 1.3mt/yr Gulf Coast Ammonia plant—developed by private equity firm Lotus Infrastructure Partners and Germany’s Mabanaft—experienced startup delays and then subsequent technical issues following a brief period of production earlier this year. It is not clear when the facility will start full operations.

US projects were recently boosted by the government’s decision to keep its 45Q carbon tax credits scheme in place

Fertiliser manufacturer CF Industries already has a large-scale grey ammonia facility at Donaldsonville, Louisiana, where it is also developing the 1.4mt/yr Blue Point blue ammonia project in partnership with Japan’s JERA, targeting a 2029 startup date.

Qatar's 1.2mt/yr Qafco 7 blue ammonia development remains on pace to start production in Q2 2026. The company has previously stated the high-efficiency plant will use around 30m Btu per tonne of ammonia produced.

However, other firms have scaled back or paused blue ammonia developments recently, citing a lack of demand. In April, Oklahoma City’s LSB Industries announced it had paused its 1.1mt/yr blue ammonia project on the Houston Ship Channel due to tariff uncertainty and muted demand.

And earlier this year, Saudi Aramco slashed its plans to produce 11mt/yr of blue ammonia by 2030 to just 2.5 mt/yr, saying that high prices—relative to conventional ammonia—were a hurdle to securing the offtake agreements required to underpin the developments.

Premium markets and potential use

The large-scale blue developments underway are targeting the premium, emission-conscious markets in Europe and East Asia, where Japan and South Korea have identified carbon-adjusted ammonia as a potential avenue to decarbonise shipping, power generation and heavy industry. But much depends on the future regulatory landscape ensuring that higher-cost blue ammonia can be competitive.

The Japanese and South Korean governments are supporting efforts by their respective shipbuilding industries to build ammonia-fuelled and ‘ammonia ready’ vessels—which can be converted to run on ammonia at a later date—as well as specialised ammonia-carriers and bunkering ships. However, the widespread adoption of ammonia as a “clean” marine fuel will still require significant investment in new or retrofitted vessels, bunkering and storage infrastructure, and the retraining of crews to handle the toxic substance safely, so it is by no means guaranteed.

Japan is already testing ammonia co-firing for power generation as a way to keep its coal-fired power stations in operation while still cutting emissions. Similar trials—with Japanese backing—are underway in India, while South Africa—which is heavily dependent upon its ageing fleet of coal-fired power stations—has also expressed interest in accessing this Japanese expertise.

Germany and Japan in particular have identified hydrogen as an energy source to help decarbonise heavy industry. But long-distance hydrogen transportation is difficult due to its low energy density and the extremely low temperatures required for liquefaction. Ammonia is therefore seen as a practical way to move hydrogen molecules, in part due to the existing and well-established production, shipping, storage and portside infrastructure already in place. Ammonia—chemical formula NH3—can be cracked into nitrogen and hydrogen.

The port of Antwerp already has a 15,000t/yr ammonia cracker in operation as a demonstration of the technology. And the port aims to trial ammonia bunkering this year or next. Rotterdam also has ammonia import, storage, cracking and bunkering ambitions, with both Low Country ports aiming to feed into Germany’s expanding hydrogen pipeline network.

And fertiliser companies continue to sign LNG and gas supply deals to support conventional, grey ammonia production too, bolstering gas demand regardless of blue ammonia’s economic viability or regulatory uncertainty. For instance, India's Deepak Fertilisers & Petrochemicals Corp recently signed a five-year gas offtake deal with Petronet LNG.

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Author: Andrew Gallagher