Lack of infrastructure to hamper VLAC development
Development of a very large ammonia carrier (VLAC) market could be delayed by a lack of terminal infrastructure to allow discharge of 40,000-60,000t cargoes, said Steem1960 ammonia shipbroker Lisa Maria Assmann at the Argus Clean Ammonia conference in Tokyo.
Around 40 VLACs are scheduled to hit the water between 2026 and 2028, when an uptake in clean ammonia trade is likely to be pushed by public tenders from South Korea and Japan.
"VLACs cannot discharge these large volumes using the existing infrastructure," Assmann said. "We have storages that are much smaller than that, terminals with draft issues, LOA (length overall) issues. With all these problems, I do not see these large volumes being discharged in a speedy manner in the short-term, not before 2035-40 at least."
In the larger segment of gas carriers, the very large gas carriers (VLGCs) built between 2009 and 2022 cannot carry ammonia cargoes, according to the shipbroker. These vessels were built when there were no expectations of carrying ammonia at such volumes, and the capability was not included to save costs at that time.
"By 2030 we may have about 150 VLGCs available to carry ammonia, either at 86pc or 95pc capacity, but that is still a discussion for the future because we still do not have the infrastructure in place for the discharge," Asmann said.
Ship-to-ship transfers from larger to smaller vessels could be a solution in the medium term, Assmann said, but she pondered that even then there are regulation issues that would hamper its widespread use.
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South Korea H2 power auction excludes some NH3 projects
South Korea H2 power auction excludes some NH3 projects
London, 30 May (Argus) — South Korea has announced its first clean hydrogen and ammonia power generation bidding market, but the eligibility criteria could have consequences for the development of the low-carbon ammonia industry. South Korea's trade, industry and energy ministry (Motie) announced plans on 24 May to auction 15-year power purchase agreements with domestic utility companies, including state-owned utility Kepco, as the government aims to galvanise 6.5 TWh/yr of electricity based on low-carbon hydrogen and derivatives. The parameters outlined for eligible bidders in South Korea's new power generation market are likely to favour carbon capture-based low-carbon ammonia projects over those produced with renewable hydrogen via electrolysis. And stringent carbon capture thresholds will exclude a number of currently proposed carbon capture and storage (CCS) retrofits and newbuild CCS ammonia projects. Bids will be ranked on price as well as other factors, including the carbon intensity of the hydrogen or ammonia used for power generation. Only a minor weighting will be given to South Korean ownership or participation in the project. Emission thresholds promise project exclusion Emissions will be measured in line with South Korea's clean hydrogen definition . Seoul previously set out four tiers for clean hydrogen carbon footprints ranging from less than 0.1-4kg CO2e/kg H2. This excludes emissions from shipping for the time being, possible ammonia synthesis and cracking, and handling of carbon captured during a CCS process. The highest ranking will be afforded to bids offering power generation from hydrogen or ammonia within Tier 1 and 2, which equates to less than 1kg CO2e/kg H2. But most notably, the government has outlined that any CCS projects will need to capture 90pc of carbon emitted in order to qualify for the bidding market. The 90pc threshold will exclude several low-carbon ammonia production projects that operate on steam methane reforming (SMR). Retrofitted CCS capabilities on SMR plants typically are unable to capture more than 50pc of carbon emitted, while newbuild CCS SMR plants may be capable of capture rates of around 70-95pc. Projects with autothermal reforming (ATR) are typically capable of higher carbon capture rates of 90pc or above, but also entail significantly higher costs. A number of currently announced CCS-based ammonia projects will be excluded from bidding as a result. One of the most mature retrofit projects in the US Gulf with carbon capture rates of 50pc will be unable to participate. At least one Middle Eastern CCS-SMR project will also be prevented from bidding owing to the 90pc threshold. Other emission abatement processes such as waste heat recovery will only qualify in emissions calculations if unused prior to the establishment of the clean hydrogen or derivative project, ruling out some previously used pathways to "low-carbon" ammonia production claims. Any abatements outside the hydrogen production system boundary will also be excluded. For renewable hydrogen or ammonia projects, only up to 10pc of renewable electricity certificate (RECs) may be used for the basis of their renewable energy. Motie also stipulated that for ammonia co-firing projects, an annual mixing rate of 20pc will be required. South Korea is aiming to have a 20pc ammonia co-firing demonstration completed by 2027, and to apply and commercialise 20pc ammonia co-fired power generation in 24 of the country's 43 coal-fired power plant units by 2030. Cost favours carbon capture The pricing of proposed bids will receive the heaviest weighting during the ranking process, consequently favouring projects with lower capital expenditure and operational costs. CCS-based projects currently have lower involved costs than ammonia plants planning to use renewable hydrogen as a feedstock. Motie will accept bids based on either fixed or variable pricing. Any variable price mechanisms will need to be linked exclusively to the US natural gas index Henry Hub. Volatility in exchanges rates, inflation or freight costs will not be considered in pricing structures. Natural gas indexation will also favour carbon capture projects where the main feedstock for ammonia production remains fossil-fuel based natural gas. With the contracts being awarded from 2028 for 15 years, a preference for lower-cost CCS based projects from a main epicentre of global demand will have substantial implications for clean ammonia production, cementing carbon capture projects' place within the industry for the next 1.5 decades. One Japanese company with investments in renewable ammonia projects expressed concerns that this could have a knock-on impact for the future of its projects, if South Korean governmental support is offered principally to CCS projects in the mid-term. All bids will need to be submitted by 8 November. Bidding firms will need to provide power produced through co-firing of ammonia with coal, co-firing of hydrogen with LNG, or 100pc hydrogen use in turbines or fuel cells. The volume of hydrogen or ammonia required will be heavily dependent on the power generation pathway. Winners will be announced in December 2024. By Lizzy Lancaster Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Rising Guyana-USG crude flows benefit Suezmaxes
Rising Guyana-USG crude flows benefit Suezmaxes
Houston, 29 May (Argus) — Surging Guyanese crude exports to the US Gulf coast may benefit Suezmax crude tankers as a potential new export market develops for the South American country's booming production. Citgo's 167,500 b/d Corpus Christi refinery in Texas has taken three 1mn bl cargoes of medium sweet Payara Gold in May, with a fourth Suezmax, the Nordic Hawk , transiting the Corpus Christi ship channel on 29 May, according to ship tracking data from Kpler. If the Nordic Hawk and the Aframax onto which it lightered discharge by the end of the month, the refinery's imports of Payara Gold would top 100,000 b/d in May, up from 60,000 b/d in April and 32,000 b/d in March, according to Kpler. US Gulf coast refiners last year imported just two Suezmax-size cargoes of Guyanese crude, or about 5,500 b/d. The primary destinations for the country's roughly 370,000 b/d of oil exports last year, about 85pc of which were hauled on Suezmaxes, were Europe, which took about 60pc, and the US west coast, which took about 25pc via re-export on the Trans-Panama pipeline, according to Vortexa data. A new market to the US Gulf coast would add to already-rising Suezmax demand in Guyana, where tonne-miles this year through 20 May increased by 45pc from the same period last year and by almost fivefold from the same period in 2022, Vortexa data show. Charterers moving Guyanese crude often opt for the economies of scale offered by 1mn bl Suezmaxes compared with smaller 700,000 bl Aframaxes. The start of production at the 220,000 b/d Prosperity floating production, storage, and offloading vessel (FPSO) in November 2023 helped boost Guyana's oil production to 625,000 b/d in April , according to government data. Output in April exceeded the country's rated capacity by 65,000 b/d following improvements at the older Liza 1 and Liza 2 projects in the deepwater Stabroek block. Mexican substitute? Increased US Gulf coast imports of Guyanese crude come as crude imports from Mexico fall, exerting downward pressure on rates for Aframaxes since March. US Gulf coast imports of Mexico's medium sour Isthmus have led the declines, falling to about 135,000 b/d from 1 March through 27 May compared with about 220,000 b/d over the preceding three-month period, according to Vortexa data. "Given the expectation of depressed Mexican crude exports going forward, the push and pull for Guyanese barrels between the US and Europe is likely to be stronger than ever," Kpler analyst Matt Smith wrote in a research note. By Tray Swanson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Houthi missiles hit bulk carrier in Red Sea: Update
Houthi missiles hit bulk carrier in Red Sea: Update
Singapore, 29 May (Argus) — Yemen-based Houthi militants launched five anti-ship ballistic missiles in the Red Sea on 28 May, with three striking the Greek-owned and operated bulk carrier Laax , US Central Command (Centcom) said today. But the Marshall Islands-flagged Laax is continuing its voyage with no injuries reported. The vessel had unloaded about 60,000t of soybean meal at the Turkish port of Ceyhan on 21 May and is now ballasting to Imam Khomeini port in Iran, according to data from global trade and analytics platform Kpler. Centcom forces have destroyed more than 10 uncrewed aerial systems over the Red Sea in the past week, after determining that they presented "an imminent threat to merchant vessels in the region". The systems were launched from a Houthi-controlled area of Yemen. The Houthis have launched five other anti-ship ballistic missiles since 18 May when a Houthi missile hit an oil tanker . Houthi military spokesman Yahya Saree said today that the group had carried out six military operations, three of which were in the Red Sea. Saree referenced the Laax as one of the vessels targeted with ballistic missiles and drones, and said it had been "hit directly and greatly damaged." He also named the Morea , a Malta-flagged bulk carrier, and the Sea Lady , a Marshall Islands-flagged bulk carrier, as two other ships that were targeted in the Red Sea, although no mention was made of a direct hit. He separately said the Houthis had targeted two "American" vessels ꟷ the Alba and Maersk Hartford ꟷ in the Arabian Sea, again with "missiles and drones", and also the Minerva Antonia in the Mediterranean Sea with "winged missiles." Again, there was no mention as to whether they were hit. Oil prices are rising as the conflict in the Middle East widens. An Egyptian soldier was killed in a clash with Israeli forces at the Rafah border crossing between Gaza and Egypt earlier this week. The Egyptian Armed Forces are investigating the incident, spokesperson Ghareeb Abdel Hafez said on 27 May. "A dialogue is taking place with the Egyptian side," the Israel Defense Forces (IDF) said. By Tng Yong Li, Reena Nathan and Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Houthi missiles hit bulk carrier in Red Sea: US Centcom
Houthi missiles hit bulk carrier in Red Sea: US Centcom
Singapore, 29 May (Argus) — Yemen-based Houthi militants launched five anti-ship ballistic missiles in the Red Sea on 28 May, with three striking the Greek-owned and operated bulk carrier Laax , said US Central Command (Centcom). But the Marshall Islands-flagged Laax is continuing its voyage with no injuries reported. The vessel had unloaded about 60,000t of soybean meal at the Turkish port of Ceyhan on 21 May and is now ballasting to Imam Khomeini port in Iran, according to data from global trade and analytics platform Kpler. Centcom forces have also destroyed more than 10 uncrewed aerial systems over the Red Sea in the past week, after determining that they presented "an imminent threat to merchant vessels in the region". The systems were launched from a Houthi-controlled area of Yemen. The Houthis have also launched five other anti-ship ballistic missiles since 18 May when a Houthi missile hit an oil tanker . Oil prices are rising as the conflict in the Middle East widens. An Egyptian soldier was killed in a clash with Israeli forces at the Rafah border crossing between Gaza and Egypt earlier this week. The Egyptian Armed Forces are investigating the incident, spokesperson Ghareeb Abdel Hafez said on 27 May. "A dialogue is taking place with the Egyptian side," the Israel Defense Forces (IDF) said. The IDF said on 7 May that it is conducting "targeted strikes against Hamas terror targets in eastern Rafah in southern Gaza". Israel's war cabinet "unanimously decided" that Israel would continue its operation in Rafah to apply military pressure on Gaza-based Hamas to advance the release of Israeli hostages, Israeli prime minister Benjamin Netanyahu said. The Ice front-month July Brent contract was at $84.40/bl at 03:40am GMT, up by 0.2pc from the previous settlement and by about 1.6pc from 27 May. The front-month July WTI crude contract was at $80.11/bl, up by around 0.4pc from the previous settlement and by 3pc from 27 May. By Tng Yong Li and Reena Nathan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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