ArcelorMittal Nippon Steel (AMNS), a prominent steelmaker in India, has signed a liquefied natural gas (LNG) supply contract with Shell that will run for 10 years. LNG deliveries will begin in 2027, sources close to the deal said.
Hazira receives 500k tons of liquefied natural gas
Under the terms of the contract, AMNS’s direct-reduced iron ore (DRI) plant, located at Hazira in the state of Gujarat, will receive 500,000 tons of LNG annually. The Hazira plant has a crude steel production capacity of 8.8 million tons per year, with up to 65% of this capacity based on direct reduction iron (DRI) technology.
AMNS also holds a supply contract with TotalEnergies for a similar amount of LNG, which expires in 2026. The signing of this new agreement with Shell comes at a crucial time, as AMNS is in the process of expanding its steel production capacity to 20 million tons per year over the long term. This contract highlights a growing trend in the global steel industry towards the use of cleaner energy for steel production, commonly referred to as “green steel”.
Currently, AMNS imports up to 75% of the 1.72 million tons of natural gas it imports. natural gas of natural gas it needs annually, according to an internal source. The agreement signed with Shell sets a price based on 11.5% of Brent crude oil prices, which represents the lowest slope on record for a long-term LNG supply contract in India, trading companies reported.
AMNS launches LNG tender for 2027
AMNS launched a tender in mid-March to secure an LNG supply for a period of 5 to 10 years starting in 2027. The last time the company sought a long-term contract was in 2022, when it bid for 400,000 tons per year of LNG to be delivered between 2025 and 2030.
Despite the decline in spot prices, Indian importers continue to seek long-term contracts to mitigate risks in a market that is still considered volatile. According to trading firms, the Argus price for LNG deliveries to India was assessed today at $11.50/mn Btu, compared with $10.16/mn Btu the previous week. In August 2022, this price peaked at $48.30/mn Btu.
The company has managed to reduce its carbon emissions by 32% by 2022 compared to 2015 levels, demonstrating its commitment to sustainability.
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Source: argusmedia
Photo: Shutterstock
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