Hexagon Energy Materials sets sights on clean ammonia supply with major Chevron gas deal for WAH2 project

Hexagon Energy Materials (ASX: HXG) has achieved a major milestone in its plans to become a supplier of clean ammonia to Asian buyers with the initiation of official discussions with global energy giant Chevron.

One of the largest gas reserve owners in Australia, Chevron has signed an indication for the supply of pipeline-quality gas to Hexagon’s proposed WAH2 clean ammonia project in Western Australia.

The companies are now free to facilitate discussions concerning a gas sales and purchase agreement by September 2025 to support a Hexagon project final investment decision targeted for the end of that year.

2029 initial supply

The discussions will focus on Chevron supplying 33 terajoules of gas per day from 2029.

This volume would make up 60% of Hexagon’s requirements for Phase 1 of its WAH2 project.

A final agreement would be for an initial supply period of ten years with a potential extension for a further five years.

Other gas purchases

Hexagon chair Charles Whitfield confirmed that the company expects to enter additional memoranda of understanding with other parties over coming months for gas supply and other aspects of the WAH2 project including carbon dioxide sequestration, infrastructure and offtake.

These agreements will support the WAH2 project’s entry into front-end engineering and design, planned to commence at the end of 2024.

“This is an important step forward in the development of the WAH2 project,” Mr Whitfield said.

“The indication for gas supply demonstrates the growing confidence in the viability of the clean ammonia business in Australia and its ability to supply the critical energy and bunkering markets.”

“Together with the increasing momentum of the project, [it] provides further support for the company’s progress on several strategic initiatives to transform into a clean ammonia producer.”

Massive new market

Hexagon has estimated that the market for low-emissions ammonia will reach 20 million tonnes per annum by 2035.

Hexagon notes a strong market pull for clean ammonia, driven by government support in Japan, Korea and elsewhere, while Australian government support encourages supply development.

The WAH2 project has also been identified as a potential source of decarbonised “bunker” fuel for powering bulk carriers transporting iron ore from Australia to Asia.