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Highlights
Hexagon Energy Materials has initiated discussions with Chevron regarding gas supply for its WAH2 clean ammonia project in Western Australia.
Chevron's proposed supply of 33 terajoules of gas per day could cover 60% of Hexagon's Phase 1 requirements, with an initial supply agreement potentially lasting ten years.
The clean ammonia market is projected to reach 20 million tonnes per annum by 2035, supported by strong demand from countries like Japan and Korea.
Hexagon Energy Materials (ASX:HXG) has reached a significant milestone in its ambition to become a leading supplier of clean ammonia, having commenced official discussions with Chevron, a global energy powerhouse. This collaboration centers on Chevron's indication to supply pipeline-quality gas for Hexagon's proposed WAH2 clean ammonia project located in Western Australia.
Chevron, one of Australia’s largest gas reserve holders, has expressed intent to facilitate discussions concerning a gas sales and purchase agreement by September 2025. This agreement would underpin Hexagon's final investment decision for the project, which is anticipated to occur by the end of 2025. The discussions are focused on Chevron supplying 33 terajoules of gas per day starting in 2029. This volume is expected to fulfill 60% of Hexagon's requirements for the initial phase of the WAH2 project, with a proposed contract duration of ten years, including the possibility of a five-year extension.
Charles Whitfield, Chair of Hexagon, confirmed the company’s plans to enter additional memoranda of understanding with various parties in the coming months. These agreements will encompass gas supply, carbon dioxide sequestration, infrastructure, and offtake arrangements. Such collaborations are essential for the WAH2 project’s advancement into front-end engineering and design, set to begin at the end of 2024.
This development underscores growing confidence in the viability of clean ammonia production in Australia, which is increasingly seen as crucial for the energy and bunkering markets. Hexagon projects that the market for low-emissions ammonia could reach 20 million tonnes per annum by 2035. This demand is driven by government initiatives in regions like Japan and Korea, alongside Australian government support aimed at enhancing supply development. The WAH2 project is also being positioned as a potential source of decarbonised bunker fuel for bulk carriers transporting iron ore from Australia to Asia, further emphasizing its strategic significance.
