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Highlights
- Chevron secures a gas supply deal for Hexagon Energy’s ammonia project.
- The agreement supports a major low-emissions initiative in Western Australia.
- Hexagon aims for production by 2030, targeting Asian and shipping fuel markets.
Chevron Corporation (NYSE:CVX) has signed a preliminary agreement with Hexagon Energy Materials (ASX:HXG) to supply gas for a planned low-emissions ammonia project in Western Australia. This supply deal marks a significant step in Chevron's ongoing commitment to sustainable energy solutions, with Chevron set to provide 33 terajoules of gas per day over a ten-year period, with an optional five-year extension. This gas supply will support Hexagon’s WAH2 ammonia project, currently in the development phase.
Hexagon’s WAH2 project intends to produce 600,000 tonnes of low-carbon ammonia annually, with a projected launch date before 2030. Ammonia produced from this project is expected to meet the rising demand in Asia for cleaner energy solutions, providing an alternative to coal in power generation. Additionally, Hexagon aims for this ammonia to be used as a replacement for fuel oil and diesel in the shipping industry, a sector seeking decarbonization solutions to meet global sustainability targets.
Led by CEO Stephen Hall, formerly of Woodside Energy, Hexagon is strategically positioning the WAH2 project as a key player in the clean energy sector. Hall's background in strategic planning and new markets at Woodside brings valuable insight to the development of the WAH2 project, which has been designed with a robust export focus. Hexagon is currently working toward securing a final investment decision by the end of 2025.
The Chevron-hexagon collaboration will meet approximately 60 percent of the gas requirements for WAH2’s first phase, ensuring that the project is well-resourced for its ambitious output goals. Chevron’s gas commitment enhances the stability and viability of the WAH2 initiative, enabling Hexagon to meet its production targets and fulfill export demands.
Hexagon has compared the WAH2 project to the OCI Clean Ammonia initiative in the U.S., recently acquired by Woodside Energy for USD 2.35 billion. The successful model of the OCI project in the U.S. underscores the potential for large-scale ammonia ventures, especially those focused on reducing emissions across industrial sectors. Hexagon’s project could also support the decarbonization of Western Australia’s iron ore shipping industry, which is a major component of the region’s economy.
As global demand for cleaner fuel sources rises, the Chevron-Hexagon partnership underscores the growing importance of collaborations within the energy sector to achieve long-term sustainability.
