All posts by mickeybarb@charter.net

Russia Threatens to Halt Gas, Oil Supplies if EU Price Caps Implemented

Europe, Featured, Natural Gas, News, Russia

Russian President Vladimir Putin this week said Russia will not supply gas, crude oil, or refined products to any countries that introduce price caps on Russian energy products, Bloomberg reported.

The European Union (EU) is considering new gas benchmarks and price caps as part of a package of measures to try and stem the impact of surging prices for natural gas and power on industry, business, and households.

It comes amid a tightening gas supply squeeze by Moscow. Russian state-owned Gazprom PJSC late on Sept. 2 said it would not reopen the key Nord Stream 1 pipeline from Russia to Germany after maintenance (GM Sept. 2, p. 35). The gas company later said a technical issue had been found, and the pipeline cannot operate again until it is repaired.

Putin claims that Nord Stream 1 could reopen if sanctions were eased on Russia, and that a turbine sent for repair in Germany was returned. According to a Bloomberg report, Germany previously said the turbine that was sent for repair is ready to be sent back to Russia, but Moscow claims paperwork issues are the obstacle.

EU ministers are scheduled to debate on Sept. 9 the details of a planned emergency intervention in the energy market.

Dutch TTF front-month gas (currently October), the European benchmark, traded lower this week, closing at €221.155 a megawatt-hour (MWh) on Sept. 8, up 3.4% on the day but well off the recent €339.195 a MWh hit on Aug. 26. That was close to the all-time high of €345 per MWh seen in early March.

BASF Warns it Could Cut Production Further

Germany, News, News Briefs

German Chemicals giant BASF SE said it is monitoring the natural gas market closely and could cut production further if needed, after Russian state-owned Gazprom PJSC said late on Sept. 2 it would not reopen the key Nord Stream 1 pipeline to Europe after maintenance (GM Sept. 2, p. 35).

According to a Reuters report on Sept. 5, the company, one of Germany’s largest gas users, is bracing itself for high and volatile gas prices.

BASF already has reduced production at its ammonia plants and at other facilities that need “large volumes” of natural gas to operate (GM July 29, p. 1). The company did not provide any specifics on the planned reductions and plant utilization rates, but has said it is sourcing some of its ammonia needs from outside Europe.

CEO Martin Brudermüller said at a July 27 media call presenting second-quarter earnings that BASF will buy some ammonia from other suppliers to meet orders.

In Europe, BASF has ammonia production capacity of 910,000 mt/y at Ludwigshafen, Germany, and 610,000 mt/y at Antwerp, Belgium, according to the Green Markets database.

Court Sends Russian Phosphate CVD Case Back to DOC Due to Calculation Issues

Morocco, News, News Briefs, Phosphate, Russia, U.S.

The US Court of International Trade on Sept. 2 issued an order partially remanding the US Department of Commerce’s (DOC) final determination on countervailing duties (CVD) on phosphate imports from Russia. The Court cited calculation issues for the remand, specifically on benchmark natural gas prices and phosphate rock input issues. According to the Court, the DOC acknowledged one error in calculations in an August filing. DOC has until Nov. 1, 2022 to respond.

The Court sustained other findings by DOC that Russian natural gas supplier Rosneft was a government authority, DOC’s de facto specificity finding regarding gas, and utilization of a tier-three benchmark for gas.

Not content with duties imposed on imports of phosphate fertilizers from Morocco and Russia (GM Feb. 12, 2021), The Mosaic Co., Tampa, filed a pair of federal lawsuits arguing that the duties should have been higher and that DOC miscalculated the value of certain foreign government subsidies (GM May 14, 2021).

For Morocco’s OCP SA, DOC calculated a CVD rate of 19.97%. For Russia, the rate was 9.19% for PhosAgro, 47.05%for EuroChem Group, and 17.2% for other Russian companies.

Morocco’s OCP SA and Russia’s PhosAgro and EuroChem challenged the DOC duties in court filings on June 4, 2021 (GM June 11, 2021). OCP listed multiple factors, focusing on the US market, while PhosAgro mainly attacked DOC’s calculation of Russian natural gas costs and consumption. EuroChem said the DOC decision was not supported by substantial evidence and otherwise not in accordance with law.

Two separate cases, one regarding Russia and another Morocco, are working their way through the Court.

Ukraine’s Rivneazot Resumes Nitrogen Fertilizer Production

Ammonia, Ammonium Nitrate, News, News Briefs, Nitrogen, Ukraine

Ukraine’s PJSC Rivneazot has resumed ammonia production and begun the launch of a limestone-ammonium nitrate unit and a non-concentrated acid unit according to Group DF, owned by Ukrainian oligarch Dmytro Firtash, in a Sept. 5 statement on its website. Rivneazot, located in the northwest of the country, is part of the Group DF nitrogen business.

The restart follows the completion of scheduled maintenance work, and has been timed to meet the autumn season in order to supply Ukraine’s farmers with nitrogen fertilizers,

“We have started a planned seasonal campaign to launch key workshops,” said the statement, citing Rivneazot Board Chairman Mikhail Zabluda. “First of all, we will increase the production of IAC [limestone-ammonium nitrate], the most demanded fertilizer today.” Following the restart, operational capacity is 650,000 mt/d of ammonia, 1,600 mt/d of limestone-ammonium nitrate, and 960,000 mt/d of nitric acid, according to the company statement.

“Further resumption of production capacities will depend on market conditions – capacities will be loaded in proportion to effective demand,” said Zabluda.

He emphasized that an equally important factor in the resumption of the full production cycle of fertilizers is the availability and current cost of natural gas.

Group DF’s nitrogen business is operated via the Ostchem Holding, which controls Ukraine’s largest nitrogen fertilizer producers. As well as Rivneazot, Ostchem controls Cherkasy Azot, Severodonetsk Azot, and Stirol, the latter two operations being located in Russian-occupied Ukraine.

Incitec’s Waggaman Advances Toward Clean Ammonia Production; Carbon Capture Studied

Ammonia, Australia, Featured, Louisiana, News

Incitec Pivot Ltd.’s (IPL) explosives business Dyno Nobel reported Sept. 5 that a front end engineering design (FEED) study is underway for a carbon capture facility at the Waggaman, La., ammonia plant site that will be capable of processing up to 950,000 mt of CO2 to transport via a pipeline to a permanent geological sequestration site. The move is part of the company’s plans to produce de-carbonized ammonia from the Waggaman plant.

In addition, IPL said it has completed a selection process and has established Memoranda of Understanding (MOU’s) with several short-listed parties to work through options to transport and sequester CO2 from Waggaman.

IPL said it is able to leverage the fact that the plant already produces a high concentration CO2 stream, which “makes it much more economic to process than many other industries’ CO2 streams.”

“We basically only need to compress and dry the gas then send to pipeline,” said IPL Managing Director & CEO Jean Johns.

A new or repurposed gas pipeline will be used to transport the CO2 to the Class VI Well.

Subject to the successful completion of the FEED Study, construction of the carbon capture unit at Waggaman is expected to begin in 2023 and be completed by the end of 2025.

IPL told shareholders at an Investor Day event on Sept. 6 that Waggaman has been producing above its 800,000 mt/y ammonia capacity since the production restart on April 19 (GM April. 22, p. 1).

The company has a target to be Net Zero by 2050, or sooner. Emissions from the Waggaman plant represent 45% of Dyno Nobel’s greenhouse gas emissions, and this project alone is expected to reduce emissions by some 30% against the 2020 baseline, or about 800,000 mt/y of CO2e, IPL said.

Incitec Pivot FY2022 Dented By Falling Fertilizer Demand, Supply Chain Costs

Australia, Earnings, News

Incitec Pivot Ltd. (IPL), Southbank, Victoria, has revealed distribution volumes in its fertilizer business have fallen as a result of lower demand, largely due to higher pricing, and global fertilizer supply constraints.

Managing Director and CEO Jean Johns told shareholders at a company Investor Day on Sept. 6 that FY2022 Earnings Before Interest and Tax (EBIT) for the distribution arm, part of IPL Fertilisers Asia Pacific business, is forecast at A$40-$45 million. EBIT for the half-year to March 31, 2022 was A$18.6 million, a 2% increase on the same year-ago period (GM May 27, p. 25)

But IPL’s gas bill has increased by around $45 million due to gas supply disruptions at the Phosphate Hill, Queensland, phosphate fertilizer plant. Gas supply disruptions have forced the operation to source additional gas from the spot market and under short-term contracts to meet shortfalls. But IPL said contract gas supplier Power and Water Corp. has confirmed that full quantities are expected to be restored in February 2023.

Phosphate Hill is now working at nameplate capacity following the completion of a turnaround. Annual production volumes are forecast to be around 750,000 mt for FY 2022. Ammonium phosphates production saw a marginal uptick (1%), to 431,900 mt in the first fiscal half.

IPL confirmed the planned discontinuation of its Gibson Island ammonia and urea manufacturing facilities in Brisbane, Queensland – announced in November 2021 (GM Nov. 12, 2021) – remains on track for the end of this calendar year when the gas contract expires. It said the closure costs remain substantially in line with previous disclosures.

The company’s decision to close the plant was due to it being unable to secure “an economically viable” long-term gas supply to the plant beyond its current supply contract, “despite extensive efforts”

Regarding IPL’s Dyno Nobel Americas (DNA) business, IPL told shareholders its explosive business was experiencing some supply chain and inflationary pressures, and to expect a lag in earnings’ recovery on account of pass-through and contract price resets.

It also reported the company has deferred the planned turnaround of the Cheyenne, Wyo., ammonium nitrate plant to FY2023 due to the non-availability of critical equipment.

In its Dyno Nobel Asia Pacific (DNAP) segment, IPL reported the business is also facing some impacts from La Niña, as well as supply chain disruptions.

IPL reported a big surge in net profit after tax (NPAT) to A$384.1 million for the first half of FY2022 to March 31, 2022, up from A$36.4 million the previous year. Earnings per share were 19.8 Australian cents versus the year-ago 1.9 cents. EBIT increased by 416% to A$568.2 million, up from A$110.2 million, while revenue rose 48% to A$2.55 billion, up from the prior year A$1.72 billion.

In May, IPL announced that it had revived its plan to separate its Incitec Pivot Fertilisers and Dyno Nobel businesses to create two separate companies, with plans to demerge its fertilizer and mining explosives divisions into two separately Australian Securities Exchange (ASX) listed companies by mid-2023 (GM May 27, p. 1).

The company said the decision to pursue a structural separation of the company is the result of a comprehensive review, “with robust underlying market conditions supporting each business to move forward with appropriately strong balance sheets.”

State Agency Approves Second Phase of EuroChem Usolskiy Potash Mine Development

Europe, News, News Briefs, Potash, Russia

EuroChem Group AG’s proposed project  for the second phase of its Usolskiy potash project, south of Berezniki, has secured approval by Russia’s state expert review office Glavgosexpertiza, Interfax reported this week.

The project involves the construction of a new underground mine with capacity to mine 12.6 million mt/y of sylvinite ore, a processing plant, together with additional transport and utilities infrastructure, according to the report.

EuroChem has still to take a final investment decision on the project, but plans to make the decision this year.

The main difficulty for the new mine development on the Verkhnekamskoye deposit – on which the existing Usolskiy potash mining operation is based – is easy solubility of the salts and the water content of the strata above the salt massif, according to the report, citing a Glavgosexpertiza media statement. As a  consequence, the appropriate design solutions have to be adopted for the safe and reliable operation of mining facilities, including to rule out accidental flooding of the mine,” the agency said.

EuroChem plans to undertake the project in 2023-30, according to the report.

The existing Usolskiy Potash Plant produced 2.39 million mt of potash last year, and in February 2022, EuroChem said the operation was on track to reach 2.7 million mt/y capacity “soon” (GM Feb 25, p. 32). According to this week’s report, that capacity will be reached in 2023, with capacity set to rise to 3.7 million mt/y-4.0 million mt/y by 2026 and – with the second phase – to 4.7 million mt/y after 2027.

EuroChem produced 228,000 mt/y last year at its other potash operation, the VolgaKaliy Potash Plant in Russia’s southern Volgograd region, and also made the first commercial sales from the operation, which has been dogged by geological issues impacting development.

 The group has also been conducting exploration work at a third potential third potash project outside Saratov in southwest Russia, the so-named SaratovKaliy Potash Project.

Norway’s H2Carrier, Statkraft to Study Green NH3 Floating Production Vessel

Green Ammonia, News, News Briefs, Norway

Norway’s H2Carrier AS and state-owned hydropower company Statkraft AS have partnered up in a Memorandum of Understanding for the study of the possible use of H2Carrier’s green ammonia floating production vessel on certain offshore wind locations.

The P2XFloaterTM will utilize renewable power to produce green hydrogen and green ammonia for shipment to international markets.

H2Carrier recently received an Approval in Principle from Norwegian registrar and classification society DNV for the use of the vessel for near-shore production. H2Carrier said the purpose of the new study is to evaluate its use in a true offshore environment.

The company believes the P2XFloater will contribute to improve the power flexibility of an offshore wind installation and make such a facility less dependent on grid and export cable facilities. The study will assess the challenges of operating electrolyzers and an ammonia production process offshore with variable load handling.

H2Carrier will also team up with Norwegian engineering company KANFA AS and its parent company Technip Energies for the study.

OCP Joins EITI as Supporting Company

Morocco, News, News Briefs, Norway

OCP Group, Casablanca, has joined the Oslo, Norway-based Extractives Industries Transparency Initiative (EITI), a global coalition of governments, as a supporting company.

Through this partnership, the OCP Group “is committed to embedding transparency in its corporate management systems and processes” by adopting EITI’s principles, helping to advance its agenda with transparency, the EITI said in a Sept. 5 statement on its website.

By committing to the revised Expectations for EITI supporting companies, OCP will learn from international best practices and adopt a leadership role in making its operations more transparent and more accountable.”

To this end, the OCP Group provides an interim consolidated financial statement that outlines financial information, the statement noted.

The Moroccan phosphates group has also formed a code of conduct, which includes anti-corruption and bribery procedures, the statement also noted.

“This partnership will deepen our commitment to transparency and accountability in the conduct of our business activities,” OCP said on Twitter, as cited by a Morocco World News report.

By becoming a member of the EITI, countries commit to disclose information along the extractive industry value chain – from how extraction rights are awarded to how revenues make their way through government and how they benefit the public.

In each country that has joined the EITI, a multi-stakeholder group, composed of government, companies and civil society, supports implementation of the EITI Standard.

JPMC to Raise Phos Acid Capacity at IJCC, Inaugurates Main Weighbridge

Jordan, News, News Briefs, Phosphoric Acid

Jordan Phosphate Mines Co. (JPMC) on Sept. 1 inaugurated a project to build a fourth phosphoric acid concentration unit at its wholly-owned subsidiary, Indo-Jordanian Chemicals Co., (IJCC) in southern Jordan, according to Jordan’s Petra news agency, citing JPMC.

The $2.3 million project, inaugurated by JPMC Chairman Mohammad Thneibat, aims to increase IJCC’s production capacity by about 31,000 mt/y of phos acid to some 610,000 mt/y.

The company on Sept. 1 also inaugurated the main weighbridge at its Eshidiya phosphate mine, also in southern Jordan and its largest mine. The weighbridge was connected electronically with the Aqaba industrial phosphate terminal. This will contribute to the export of about 25, 000 mt/d of phosphate ore through the port of Aqaba, according to the report, citing the company.

The projects are aimed at further expanding JPMC’s phosphates production and exports (GM May 25, p. 1).