LONDON, June 26,
2024 /PRNewswire/ -- Global energy and commodity
price reporting agency Argus has launched an index to assist
companies trading low-carbon hydrogen products distributed to key
markets in northeast Asia.
The Argus Japan Korea Low-Carbon Ammonia Benchmark (JKLAB) is
for the mass-balanced all-in cost of low-carbon ("blue"), liquid
ammonia produced in the US Gulf coast and delivered on a cfr basis
to either Ulsan, South Korea, or
Niihama, Japan. This cost-based
approach is fundamentally different from assessing spot prices and
is designed specifically to assist offtake negotiations.
The daily index is based on autothermal reformer ammonia
production using Henry Hub-priced natural gas, with carbon capture
and storage, for a minimum cargo size of 20,000t. This production
route delivers a carbon intensity within the thresholds set by
Japan and South Korea.
A key vector for transporting large volumes of hydrogen across
oceans is to combine it with nitrogen to form more easily handled
liquid ammonia. Northeast Asian power generation companies have
successfully trialled the substitution of coal with ammonia, and
now intend to roll out commercial co-firing at an initial rate of
about 20%, and then raise coal-ammonia blending test rates to
50%.
The lack of a clear market reference for low-carbon ammonia has
made counterparty negotiations difficult, with a broad range of
formulas used to agree provisional offtake deals. These must now be
finalised, yet variations in formula pricing present significant
risks for end user utilities that operate on a cost-plus model, as
well as developers themselves.
The Argus JKLAB index offers buyers in Japan and South
Korea as well as producers in the US and elsewhere a common
reference to structure offtake agreements. This enables them to
manage their input cost volatility for long-term supply contracts,
which often run for over a decade, without having to rely on a
myriad of complex instruments. For example, the production cost of
US Gulf coast blue ammonia has seen a 12-month price range of 34%
and managing multiple input costs is complex owing to their
differing market fundamentals.
Argus chairman and chief executive Adrian Binks said: "We have a long history of
providing transparency to commodity buyers in Japan and South
Korea. Northeast Asia is a
nexus in the hydrogen economy as market participants embrace
innovative ways to reduce greenhouse gas emissions. Our new JKLAB
provides a clear market signal to developers, consumers and
governments as they seek to price long-term offtake agreements
around a single instrument, rather than having to rely on multiple
references to natural gas, power, carbon capture and storage or
volatile low-carbon hydrogen or unabated ammonia prices."
The Argus JKLAB complements Argus' leading suite of ammonia spot
price assessments and hydrogen production costs around the world.
These are based on a range of pathways including coal gasification,
steam-methane and autothermal reformation of natural gas, as well
as grid and direct-coupled renewable electrolysis.
Argus contact information
London: Seana Lanigan
+44 20 7780 4200
Email Seana
Houston: Matt Oatway
+1 713 968 0000
Email Matt
Singapore: Tomoko Hashimoto
+65 6496 9960
Email Tomoko
About Argus Media
Argus is the leading independent provider of market intelligence
to the global energy and commodity markets. We offer essential
price assessments, news, analytics, consulting services, data
science tools and industry conferences to illuminate complex and
opaque commodity markets.
Headquartered in London with
over 1,400 staff, Argus is an independent media organisation with
30 offices in the world's principal commodity trading hubs.
Companies, trading firms and governments in 160 countries around
the world trust Argus data to make decisions, analyse situations,
manage risk, facilitate trading and for long-term planning. Argus
prices are used as trusted benchmarks around the world for pricing
transportation, commodities and energy.
Founded in 1970, Argus remains a privately held UK-registered
company owned by employee shareholders and global growth equity
firm General Atlantic.
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