Alcoa, Chevron ink Western Australia gas supply deal

Spanish Market: Metals, Natural gas
17/12/24

US oil firm Chevron has agreed on a new term contract to supply 130 petajoules (PJ) (3.4bn m³) of gas from its Pilbara region LNG projects in Western Australia (WA) to US aluminium group Alcoa's alumina refineries in southwest WA.

The sale and purchase agreement will start in 2028 and run for 10 years, with the supply sourced from Chevron's operated 15.6mn t/yr Gorgon LNG and 8.9mn t/yr Wheatstone LNG ventures, as well as from its share in the 14.4mn t/yr North West Shelf (NWS) LNG project operated by Australian independent Woodside Energy.

Chevron agreed a 37PJ deal with Alcoa for WA supply in 2020, adding to a prior contract for 64PJ.

The deal comes as scrutiny on the state's LNG projects grows, following a parliamentary committee report, which recommended reforms to domestic gas policies to avoid supply shortfall. WA-based LNG projects must reserve 15pc of output for domestic users, but some are not meeting this commitment at present.

WA subsequently moved in September to incentivise onshore production to try and bring more supply on line this decade.

Alcoa is ending production at the 2.2mn t/yr Kwinana alumina refinery in WA citing age, scale, operating costs, current bauxite grades and market conditions. The firm continues to operate the state's Pinjarra and Wagerup refineries with a combined production capacity of 6.6mn t of alumina, and in August, it bought out its joint venture partner, Alumina Limited, in an all-stock deal valued at approximately $2.8bn.

Alumina prices have risen by more than 70pc in 2024. They hit a record high of more than $780/t in November following supply disruptions, but the tight market is tipped to ease in the next two years.

By Tom Major

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18/12/24

Australia's BHP, Rio Tinto in electric smelter tie-up

Sydney, 18 December (Argus) — The Australian NeoSmelt resource consortium will build a major pilot electric iron smelter in Kwinana, Western Australia, supporting a broader push towards low-emissions steel. The consortium is led by the country's largest iron miners, BHP and Rio Tinto and steel producer BlueScope. Western Australia's government has agreed to support the project through a A$75mn ($47.5mn) investment, it said on 17 December. NeoSmelt expects the site to produce between 30,000-40,000t of molten iron at the site once it is operational by 2028. The site will use natural gas to process ore. The group will also look at moving towards hydrogen-based production processes over time. But the NeoSmelt development is still at an early stage. The consortium will make a final investment decision on the plant sometime in 2026. Other firms are also currently working on low-carbon smelting projects in the state. Global mineral firm Fortescue plans to house an electric furnace at its green iron plant at its Christmas Creek mine. The company hopes to produce 1,500t/yr of iron at the facility, beginning in 2025. Another younger metals firm Green Steel of WA (GSWA) is developing a similar smelter in the state's Mid-West region. GSWA is scheduled to start producing 2.5mn t/yr of iron at the plant, using natural gas and hydrogen, in 2028. The company will make a final decision on the project next year. The recent push towards green steel production comes after federal government initiatives designed to support sustainable production across the country. The Australian government announced in its most recent budget that it will focus on supporting aluminium and steel decarbonisation efforts over the next decade. By Avinash Govind Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US funding bill to allow year-round E15 sales

18/12/24

US funding bill to allow year-round E15 sales

Washington, 17 December (Argus) — A stopgap government funding measure that leaders in the US House of Representatives unveiled late Tuesday would authorize year-round nationwide sales of 15pc ethanol gasoline (E15) and offer short-term biofuel blending relief to some small refiners. The 1,547-page bill, which is set for a vote in the coming days, is needed to avoid a government shutdown that would otherwise begin on Saturday. The bill would fund the government through 14 March and extend key expiring programs, such as agricultural support from the farm bill. It would also provide billions of dollars in disaster relief and pay the full cost of rebuilding the Francis Scott Key bridge in Maryland, which collapsed earlier this year after being hit by a containership. The inclusion of the E15 language, based on a bill by US senator Deb Fischer (R-Nebraska), marks a major win for ethanol producers and farm state lawmakers who have spent years lobbying to permanently allow year-round E15 sales. The bill would also provide short-term relief to some small refiners under the Renewable Fuel Standard that retired renewable identification numbers (RINs) in 2016-18 in cases when their requests for "hardship" waivers remained pending for years. The bill would return some of those RINs to the small refiners and make them eligible for compliance in future years. E15 was historically unavailable year-round because of language in the Clean Air Act that imposes more stringent fuel volatility requirements during summer months. In president-elect Donald Trump's first term, regulators began to allow year-round E15 sales by extending a waiver available for 10pc ethanol gasoline (E10), but a federal court in 2021 struck that down . Federal regulators have issued emergency waivers retaining year-round E15 sales over the last three summers. Enacting the stopgap funding bill would also make it unnecessary for eight states to follow through with a costly gasoline blendstock reformulation — set to begin as early as next summer — they had requested as a way to retain year-round E15 sales in the midcontinent . Oil industry groups last month petitioned EPA to delay the fuel reformulation until after the 2025 summer driving season, citing concerns about inadequate fuel supply and the prospects that a legislative fix would make required infrastructure changes unnecessary. Ethanol groups say the E15 legislative change could pave the way for retailers to more widely offer the high-ethanol fuel blend, which is currently available at 3,400 retail stations and last summer was about 10-30¢/USG cheaper than 10pc ethanol gasoline (E10). Offering the fuel year-round would be "an early Christmas present to American drivers," ethanol industry group Growth Energy chief executive Emily Skor said. House speaker Mike Johnson (R-Louisiana) has faced blowback from many Republicans in his caucus for negotiating such a sprawling bill that has tens of billions of dollars in new spending, after vowing to buck a practice of preparing a "Christmas tree bill" that forces lawmakers to vote on a must-pass bill right before the holidays. Johnson said today the bill remains a "small" funding bill, but that it needed to expand because of "things that were out of our control" such as hurricanes and economic aid for farmers. The Republican backlash could make it more difficult for Johnson to pass the bill, but Democrats are expected to provide broad support. By Payne Williams and Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Argentina touts quarterly economic growth

17/12/24

Argentina touts quarterly economic growth

Montevideo, 17 December (Argus) — Argentina's macroeconomic conditions continue to stabilize, with growth picking up and inflation trending down. The economy expanded by 3.9pc in the third quarter of the year compared to the previous three months, according to preliminary data from the statistics agency (Indec). It was the first quarter-on-quarter growth since President Javier Milei took office a year ago during a deep recession with a promise to overhaul the long-struggling economy. The economy contracted by 1.9pc in the fourth quarter of 2023, by 2.1pc in the first quarter of 2024 and by 1.7pc in the second quarter. While the economy is still down by 2.1pc compared to a year earlier, the government presented the data, together with falling inflation, as evidence that Milei's strategy to deregulate and shrink the state is working. Inflation in November was 2.4pc, a huge decline from the 25pc when Milei took office in December 2023. Accumulated inflation through November was 112pc. According to Indec, private consumption was up by 4.6pc from quarter to quarter and investment by 12pc. The country has had a fiscal surplus for nine months. The currency has stabilized after a brutal devaluation early in 2024 of more than 50pc. Exports grew by 3.2pc from the second quarter and are the most positive economic indicator so far this year. Exports in the first three quarters of 2024 were up by 20pc compared to a year earlier. The energy sector in the GDP calculation increased by only 0.4pc in third quarter, but it plays an important role in the trade balance. The country will have a trade surplus this year close $20bn compared with a $6.9bn deficit in 2023, according to the central bank. Argentina registered its first energy surplus in 15 years in the first half of 2024, exporting $4.81bn and importing $3.79bn. Crude exports were up by 60pc compared to 2023. Oil and gas trade organization Ceph forecasts an energy surplus of $25bn by 2030, based on projections of crude output of 1.5mn b/d and natural gas at 230mn m³/d. The government has reduced from 18 to eight the number of cabinet ministries and eliminated hundreds of regulations. Deregulation and transformation minister Federico Sturzeneggar announced in early December that approximately 4,500 regulations would be eliminated in 2025. But the austerity measures have caused a spike in poverty, with more than 50pc of the population living below the poverty line, up from 41.7pc in December 2023. By Lucien Chauvin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Alabama lock to remain closed until spring

17/12/24

Alabama lock to remain closed until spring

Houston, 17 December (Argus) — The US Army Corps of Engineers (Corps) has determined that the main chamber of the Wilson Lock on the Tennessee River near Florence, Alabama, will remain closed until spring 2025 as repairs continue. The Wilson Lock, the first lock on the Tennessee River, closed on 25 September after cracks in the lock gates on both the land and river sides were discovered. The main lock was closed to prevent further damage in the main chamber, although the auxiliary chamber was kept open for navigation. The Corps had been eyeing an earlier opening date for the main chamber since the start of November. Although months of repairs have taken place, the Corps resolved to keep the main chamber closed to preserve the lock and maintain personnel safety. The Corps, in partnership with the Tennessee Valley Authority (TVA), is still assessing the root cause of the cracking. A second de-watering of the gate is scheduled for the first three months of 2025 to repairs. No official date has been set for the lock reopening, although some barge carriers have heard of a late April opening date. A regular 15 barge tow has endured 5-6 days of delay through the lock on average, according to carriers. The Corps' Lock Status Report on the Wilson Lock reported a nearly two-week delay for tows navigating through the lock. This has been costly for shippers by forcing them to pay delay fees. Wilson Lock is the second lock in Alabama to undergo a lengthy closure this year. Most lock and dams along the US river system are over 70 years old, likely resulting in more closures in the coming year. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

CDU promises support to abolish German gas levy

17/12/24

CDU promises support to abolish German gas levy

London, 17 December (Argus) — German opposition leader Friedrich Merz has said his party would agree to the law which abolishes the German gas storage levy on cross-border flows, and the bill is now scheduled to be debated in parliament on 20 December. The removal of the gas storage levy for European neighbours is "a law that we can support" before the next election, the conservative CDU party leader Merz said in Berlin yesterday. Merz had previously said he would only be open to discussions about potential last-minute legal projects after the vote of no confidence, which chancellor Olaf Scholz lost yesterday. Elections are now expected to be held in late February, putting all parties in campaign mode. The German government collapse in early November put the storage levy change at risk of not being passed before the end of this year, as the government has lost its working majority in parliament. THE originally introduced the levy in October 2022 to recoup the cost of purchasing 50TWh of gas in summer 2022 on the spot market without hedging it forward. It bought this gas at an average price of about €175/MWh, when spot prices spiked following the halt to Russian flows. Germany announced in May that it would scrap the charge at border points, following complaints from its eastern neighbours that the levy discourages transit through Germany and complicates efforts to diversify away from Russian gas. Timing remains tight for levy to be passed The law is scheduled to be debated in parliament on the morning of 20 December and will have to be approved by the upper house of parliament — the Bundesrat — that same day if it is to enter into force on 1 January. The bill already had its first reading in September. The second and third readings of a bill can be compressed into one if no amendments to the law are adopted during the session. During the comments stage of the storage levy bill in the Bundesrat, the house proposed a second change to the energy industry act concerning regulatory approval for hydrogen electrolysers. Merz said this was largely connected with wind power and planning on a state level in North Rhine-Westphalia. He said he hoped it was possible to find a consensus, and stressed this was part of the talks this week. If the current draft has to be amended, the second and third reading could not be completed in one session. And the Bundesrat has only one more session before the new year, also on 20 December. The Bundesrat confirmed to Argus today it had received a request to shorten the time-limits on the relevant bill. This request will be decided tomorrow afternoon, and if approved, the Bundesrat could put any passed bills onto the agenda on 20 December, the Bundesrat told Argus . Politicians have told Argus the law could also be abolished retroactively after 1 January . And German market area manager THE told Argus late last week that the first payments for the new levy are only due around the end of March, leaving an almost three-month leeway for the law change to take effect . But traders have emphasised that without a strong signal the flow-based charge will go, spot price premiums in neighbouring markets will have to be large enough to offset the levy in order to attract imports. Austria still threatens legal steps Austrian energy and climate minister Leonore Gewessler yesterday reiterated that Austria could reactivate its lawsuit against Germany as a "measure of last resort". Gewessler will instruct the Austrian civil service to investigate and prepare a lawsuit at the European Court of Justice but said she remains confident she will not have to use this last resort. The matter is of utmost importance to Austria's energy security and diversification on the path away from Russian gas, Gewessler said. THE assuming no revenues from cross-border flows in its most recent levy setting was "a positive signal", Gewessler said. THE set the levy at €2.99/MWh for the first six months of 2025. Austrian regulator E-Control had previously told Argus it would "take all necessary steps" at an EU level if it looks like a law to abolish Germany's storage levy on gas exiting the country will not be passed in time. Czech deputy minister for industry and trade Stepan Hofman said yesterday "Germany confirmed to us it is doing everything in its parliament to approve the abolition of the tax as of January 1 2025, this week." By Till Stehr Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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