Hexagon Energy Materials Limited (Hexagon) is pleased to announce the signing of a Memorandum of Understanding with Oceania Marine Energy Pty Ltd (Oceania), This MOU focuses on exploring the potential development of a low-emissions ammonia bunkering business in Dampier, located in the Pilbara region of Western Australia.
The primary market for the WAH2 Project’s low-emissions ammonia is to replace coal in thermal power generation in Japan and South Korea. However, ammonia bunkering presents a promising domestic market opportunity. This involves supplying low-emissions ammonia as a bunker fuel for bulk carriers that transport iron ore exports from Australian producers to customers across Asia. This initiative could establish a new Australian business that uses locally produced low-emissions ammonia to decarbonise Australia’s iron ore exports.
Under the MOU, Hexagon and Oceania aim to:
- Demonstrate the feasibility of supplying low-emissions ammonia as bunker fuel for iron ore bulk carriers via ship-to-ship transfer.
- Confirm demand for ammonia bunkering and potential commercial terms.
- Define an appropriate development plan.
- Engage with government and other stakeholders.
Hexagon and Oceania will collaborate with stakeholders, including ship owners, fuel traders, iron ore producers, port authorities, and government, to complete a market assessment, develop a business model, and pursue preliminary offtake agreements for low-emissions ammonia as bunker fuel. The aim is to complete this work by Q4 2024.
The MOU is set for a two-year term to allow for collaboration beyond the anticipated final investment decision for Hexagon’s WAH2 Project. Hexagon targets the WAH2 front end engineering design (FEED) entry in mid-2024 following the completion of planned technical work and finalisation of conditional commercial agreements. Although a bunkering offtake agreement is not a prerequisite for FEED entry, it is seen as an opportunity to add value during FEED. Confidential negotiations are ongoing, and Hexagon intends to have key agreements in place to support the start of FEED in Q3 2024.
Stephen Hall, Chief Executive Officer of Hexagon Energy Materials Limited, commented: “This Memorandum of Understanding with Oceania Marine Energy represents another significant step for Hexagon’s WAH2 low-emissions ammonia project. It offers the opportunity to establish a new bunkering industry in Western Australia that could play a leading role in decarbonising Australia’s iron ore exports for the benefit of Australia and its trading partners in Asia. This opportunity offers market diversity, requires no additional capital expenditure and is complementary to Hexagon’s primary objective of exporting low-emissions ammonia from WAH2 to help decarbonise power generation in Asia. I look forward to making further announcements as Hexagon continues to progress confidential negotiations with key input providers, potential off-takers, and strategic partners.”
Oceania Marine Energy
Oceania Marine Energy Pty Ltd is an Australian privately-owned company focused on establishing a bunkering business at Dampier in the Pilbara. The company aims to supply low-emissions fuel, such as ammonia, to iron ore carriers via ship-to-ship transfer and targets delivering over 1 million tonnes of low-carbon marine fuel by 2030.
Oceania, established in 2019, has been developing feasibility studies, operational practices, agreements, and partnerships to operate a low-carbon marine bunkering business for the Australia-to-Asia deep sea shipping fleet. Oceania collaborates with Kanfer Shipping of Norway to design and deliver a fleet of marine bunkering vessels that use advanced technology for operational efficiency and emissions reduction. In 2022, Oceania completed its feasibility study into ammonia bunkering at Dampier and has since been working towards establishing a ‘Green Shipping Corridor‘ between Australia and Asia.
Nick Bentley, Managing Director of Oceania Marine Energy, commented: “Oceania is enthusiastic to work with Hexagon on aligning our low-emissions ammonia production and bunker operations to meet market requirements. The key objective of our MOU is to demonstrate a viable supply of low-emissions ammonia bunker fuel, developed on a timeline to meet market demand, and in the most efficient location for the iron ore ships transporting Australian iron ore to Asia. Oceania is thrilled to continue its work alongside Hexagon and Kanfer Shipping to jointly reach our mutual goal of decarbonising shipping.”
Hexagon’s WAH2 Project
Hexagon’s flagship WAH2 Project aims to supply low-emissions ammonia to the decarbonising economies of the Asia Pacific, including Japan and South Korea. The project received land allocation in April 2023 in the Maitland Strategic Industrial Area by the Western Australian Government. The project plans to produce 600 kTPA of low-emissions ammonia, capturing and sequestering more than 90% of the associated CO2. First production is targeted for late 2028.
The demand for low-emissions ammonia is growing, with Japan and South Korea recognising its importance for energy transition. Japan’s new import target for low-emissions hydrogen/ammonia is 12 MTPA H2e by 2040. Hexagon’s WAH2 Project meets Japan’s updated Basic Hydrogen Strategy benchmark, with a significantly lower emissions intensity than required.
Iron ore exports from the Pilbara to northern Asia exceed 800 million tonnes annually, transported by bulk carriers typically fuelled by low-sulphur diesel or marine fuel oil. Ammonia-fuelled bulk carriers are being developed to decarbonise this transport. The supply of low-emissions ammonia from the WAH2 Project using a purpose-built bunker vessel offers an efficient solution, avoiding deviations from shipping routes. The Global Maritime Forum estimates demand for low-emissions ammonia could reach 0.1 MTPA in 2028, increasing to 1.2 MTPA by 2035 for the Pilbara-East Asia trade route.
About Hexagon Energy Materials Limited
Hexagon Energy Materials Limited (ASX: HXG) is an Australian company focused on future energy project development and future energy materials exploration and development. Hexagon aims to deliver decarbonised hydrogen into export and domestic markets at scale via its WAH2 Project, using renewable energy wherever possible.