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.
