Industries Qatar (IQ) has bought Qatar Petroleum’s (QP) 25% stake in Qatar Fertiliser Co (QAFCO) for $1 billion. The transaction will be 100% sourced by IQ’s own sources of funds available to IQ in form of unrestricted cash and bank balances, including short term money market investments.

 

The purchase of QP’s stake in QAFCO is consistent with IQ’s strategy to build its presence and create value across the downstream sector. The transaction specifically enhances the shareholder value by transforming IQ into a 100% owner of the world’s largest single site urea producer and expanding its footprints in a well-established fertilizer business, with a proven track record of operational excellence and market positioning, along with resilient cash flow generation capabilities, spurred by synergistic opportunities. 

 

As part of the transaction, QAFCO has entered into a new GSPA with Qatar Petroleum with effect from 1st August 2020 until 31st December 2035, covering the gas requirements of QAFCO trains 1-6 and Qatar Melamine Company (“QMC”). In addition, and as part of the same transaction, IQ’s Board of Directors also approved QAFCO’s acquisition of Qatar Petroleum’s 40% stake in QMC, effective 1st July 2020.

 

The proposed transaction and the related economic benefits would be transferred to IQ with effect from 01 January 2020, and would be subject to the approval from IQ’s shareholders as well as other regulatory and other customary approvals.

 

QP said in May its plans to sharply expand its liquefied natural gas (LNG) capacity by the middle of the decade remained on track.

 

It wants to lift its LNG output to around 110 million tonnes per annum by 2024 from about 77 mtpa currently in the first phase of its expansion.