PERTH (miningweekly.com) – Privately held Perdaman has broken ground on its A$6-billion Karratha urea project, marking the start of construction at the Pilbara’s first new gas manufacturing project in more than a decade.

The urea project will create 2 500 jobs during construction and 200 operational jobs, and will convert Western Australian natural gas from Woodside's Scarborough gas project into an estimated 2.3-million tonnes a year of urea, which is a widely used form of fertiliser for food production. 

Currently, Australia imports around 2.4-million tonnes of urea a year. 

“This important project represents a significant investment in the Pilbara and Western Australia, underlining the region's role as the engine room of Australia's economy,” said Premier Mark McGowan.

“My government is proud to support developments like the Perdaman urea project that will deliver decades of economic benefits for Western Australia, creating local jobs and diversifying the Pilbara economy. 

“It is estimated the project will create thousands of jobs within the state and generate a total revenue of A$77-billion over its life.”

The state government has executed agreements that will deliver more than A$300-million in funding for the development of the project and the region. This includes the landmark A$255-million Northern Australia Infrastructure Facility (NAIF) loans secured for the Pilbara Ports Authority and Water Corporation.

Announced in February 2022, the two loans were the first NAIF investments into Western Australian government entities and include A$159-million to the Pilbara Ports Authority for a new multi-user wharf and facilities at the Port of Dampier, and A$96-million to the Water Corporation for the expansion of the Burrup seawater supply and brine disposal scheme that will connect to the Perdaman urea plant once built.

Additionally, more than A$50-million in funding has been committed by the state government to support early design works and upgrades to public infrastructure, including road works, detailed design of a new Dampier Cargo Wharf, and upgrades to seawater supply infrastructure.

Export Finance Australia (EFA) will provide a A$269-million loan to the project, alongside NAIF and 12 other commercial lenders. EFA's loan supports Perdaman's export plans, with the project to provide vital fertiliser exports to Australia's trading partners. 

“The Perdaman urea project has an important role to play in diversifying our economy and creating local jobs for the future,” State Development, Jobs and Trade Minister Roger Cook said.

"We know that Perdaman has worked closely with the Murujuga Aboriginal Corporation to ensure that industry can co-exist and thrive alongside the cultural values of the Traditional Owners.

“The urea produced at Perdaman's Pilbara plant will be exported around the world and used in industry sectors such as agriculture. Infrastructure upgrades to facilitate the project will have flow-on economic benefits for the state, including the potential development of other downstream processing and hydrogen projects,” Cook said.

Meanwhile, oil and gas major Woodside on Wednesday announced that all the conditions relating to its long-term gas sales and purchase agreement (GSPA) with Perdaman had now been satisfied, following the final investment decision for the Karratha plant.

Supply under the GSPA is for approximately 130 TJ/day of gas over a term of 20 years, commencing upon commissioning of the plant expected in either 2026 or 2027. Gas will be supplied from Woodside’s portfolio and sourced primarily from the Scarborough project, which is currently under development. Scarborough will add up to 225 TJ/day of new domestic gas supply into Western Australia from 2026.

Woodside CEO Meg O’Neill said the GSPA becoming unconditional demonstrated Woodside’s commitment to providing gas to the Western Australian domestic market and highlighted the significant local benefits from the Scarborough project.

“Gas is an essential energy source and feedstock for power generation and industry in Western Australia, and we are pleased to continue supporting local manufacturing industries that provide jobs and in this case support food production locally and globally,” she said.

“Woodside has taken a huge step in supporting Perdaman, a local Western Australian company, and has helped to create Australia’s largest downstream manufacturing project to date,” Perdaman chairperson Vikas Rambal said.

“Perdaman's board is greatly appreciative of Woodside’s support throughout the project development,” he said.

The GSPA becoming unconditional follows a memorandum of understanding signed between Woodside and Perdaman in April 2018 and subsequent execution of the GSPA in November of that year.