Air Products to exit Louisiana (U.S.) clean energy project; flags $2.9-B hit
Air Products has terminated its Louisiana Clean Energy Complex project and said it would record up to $2.9 B in pre-tax charges in the third quarter.
The industrial gases maker said on Tuesday a detailed review showed that the expected financial returns from the project would not meet its criteria.
Air Products was developing what it described as the world's largest low-carbon energy complex in Louisiana with plans to produce blue ammonia for international buyers.
Shares of the company, which also discontinued a zero-carbon liquid hydrogen facility in Casa Grande, Arizona, and other smaller-scale projects supporting clean energy distribution, jumped 8.6% in morning trading.
Air Products said it did not expect cash expenditure related to the charges to exceed $925 million and anticipated lower cash spending after final settlements with third parties.
The exits were driven by challenging commercial conditions, project-specific economic factors, and slower-than-expected development in certain markets, largely hydrogen for mobility, the company said.
The Trump administration has been pushing for an "energy dominance" agenda based on oil, gas, coal and nuclear, in a sharp departure from the green energy-focused policies under his predecessor, Joe Biden.
Separately, Air Products and Yara International ASA said they were finalizing a marketing and distribution agreement for renewable ammonia from the NEOM Green Hydrogen Project in Saudi Arabia.
"Originally, we had expected this deal to be finalized by now, although that was before war broke out in the Middle East, so we are not overly concerned by the apparent delay," analysts at Vertical Research Partners said.
Late last year, the companies said Yara could acquire the LCEC project's ammonia production and distribution assets.
Yara said on Tuesday it would not proceed with the planned acquisition and would instead reallocate capital to other U.S. ammonia investment opportunities.
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