Yara eyes the US, but no site announcement
The US is an obvious location for new ammonia production, said Yara chief executive Svein Tore Holsether. But the Norwegian fertiliser producer is not making any announcements yet.
Holsether admits his company has had offers to relocate to the US due to Europe's high energy prices.
"We already have ammonia production in Freeport, Texas. We are evaluating further production opportunities in the US through Yara Clean Ammonia. But we're not yet at a point where we are announcing a specific investment with a location", said Holsether.
"It would be a natural place. I see this happening in our industry. Look at announcements on where new ammonia production is being considered. For sure it's the US. That's a direct result of the incentives [Inflation Reduction Act] being put in place to build this industry", Holsether told Argus.
Earlier in January, Yara announced plans to modify ammonia terminals in Germany to enable imports of up to 3mn t, equating to some 530,000 t of hydrogen.
Yara has also lobbied the EU to remove bureaucratic hurdles hindering expansion of renewables. And the firm has joined other industries in criticising "unnecessary complexities" to certify green hydrogen in the forthcoming delegated act on renewable fuels of non-biological origin (RFNBOs).
"We're the world's largest ammonia trader. And we have 12 ammonia ships, terminals and production across the world. We've been using that flexibility to bring ammonia in to compensate. Our organisation has been able to maintain production at a much higher level. We've tested our production model to the extreme", he said.
Holsether wants a massive buildup of renewables. "It's not happening fast enough. Too much bureaucracy, red tape. We have to be prepared for a situation where we need to bring in hydrogen from the outside. Here Yara can play a role using ammonia as the hydrogen carrier", he said.
"Hydrogen is only an energy carrier. We need massive amounts of renewable energy to produce hydrogen", Holsether added, pointing to Norway as the "natural place" for that to happen thanks to hydropower. "But it is not happening fast enough", he said.
Holsether noted that the energy situation in Europe is currently much better than expected. "A lot of this is down to weather", he said. But he sees a "good response", from industry and households, to reduce consumption as well as new routes bringing natural gas into Europe.
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Milei's bid to open Argentina's economy passes
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G7 countries put timeframe on 'unabated' coal phase-out
G7 countries put timeframe on 'unabated' coal phase-out
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Yara first-quarter gas consumption higher on year
Yara first-quarter gas consumption higher on year
London, 29 April (Argus) — Europe's largest fertiliser producer Yara's European gas consumption in the first quarter was up by 26pc on the year, but remained far lower than in the second half of last year. Norway-based Yara's gas consumption across Europe in January-March totalled 29.2 trillion Btu, well above the 23.1 trillion Btu a year earlier, but drastically down from 37.5 trillion Btu in the fourth quarter last year, the company's latest quarterly report shows. Yara did not report its European ammonia production for the first quarter, but the company's global output totalled 1.74mn t, up from 1.38mn t a year earlier. Yara's first-quarter European gas consumption fell from the preceding three months, despite its average European gas costs falling to $11.70/mn Btu from $13/mn Btu. The firm's European gas costs have declined sharply since peaking at $34.50/mn Btu in the third-quarter 2022, when European wholesale prices hit all-time highs ( see price graph ). Yara's quarterly spending on European gas supplies fell to $343mn in January-March, the lowest since at least summer 2021 when the company began reporting this data, and around one third the $1.08bn peak in April-June 2022. Yara's European gas consumption also fell despite a 37pc annual increase in total fertiliser deliveries in Europe . Lower curtailments, improved production economics and "volume catch-up" had supported output, Yara said. But while European deliveries improved on the year, they remained "below normal" — particularly for nitrates — and Yara sourced a larger share of its European deliveries from its global plants, the company's chief financial officer Thor Giaever said. Yara had hinted earlier this year its ammonia assets might run at 90pc or more of capacity as the company expected to boost production this year . But one explanation for the lower gas demand compared to the previous quarter is Yara may be maximising production at more efficient plants like Sluiskil in the Netherlands and Brunsbuttel in Germany, while ramping down less efficient plants, allowing the company to maintain or increase production while consuming less gas. Yara last year curtailed 19pc of its European ammonia capacity , turning towards greater imports of ammonia to replace the lower production. And that remains key to Yara's business plans , which the company said last week focused on "further strengthening operational resilience and flexibility". Argus assessed European ammonia production prices based on the TTF front-month price at roughly a $100/t discount to northwest European import prices in its last weekly assessment on 25 April, suggesting a still-significant financial incentive to produce ammonia domestically. The European fertiliser market remains under pressure by large volumes from Russia, meaning Europe has swapped an energy dependency on Russia for a food dependency, chief executive Svein Tore Holsether said, echoing previous statements . Comparing global assets Yara consumed 54.4 trillion Btu of gas globally in January-March, down from a multi-year high of 61.9 trillion Btu in October-December ( see consumption graph ). European consumption accounted for roughly 54pc of Yara's global gas demand in January-March, well down from 61pc in the previous quarter. And Yara spent $485mn on gas worldwide in January-March, 71pc for European supply, a lower proportion than at any other point since 2021. Yara's global average gas cost was $8.90/mn Btu in January-March, 24pc below its reported European cost. That discount has been a significant driver for Yara and others to increase production abroad rather than in Europe over the past two years. Yara forecasts its European gas costs at $9.70/mn Btu and $10.50/mn Btu in the second and third quarters of this year, respectively, holding well above its global average gas costs of $7.70/mn Btu and $8.40/mn Btu during those same periods. Globally, the firm aims to produce 8.6mn t of ammonia in 2025, significantly up from 7.8mn t in 2023, it said. By Brendan A'Hearn Yara European vs global gas costs $/MMBtu Yara European vs global gas consumption million MMBtu Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
India's RCF seeks 100,000t of NPS
India's RCF seeks 100,000t of NPS
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