More LNG wanted for ArcelorMittal steel mill

Vol 24, PW 16 (01 Jul 21) Midstream, Downstream, Renewables

After its deal with Total, Lakshmi Mittal-backed ArcelorMittal Nippon Steel (AMNS) is looking for more LNG to feed its long-term plans to expand its 7.5m t/y Hazira steel mill to 18m t/y.

A potential supplier tells us AMNS is talking to Qatargas, Shell, Gazprom, Novatek, Cheniere and ExxonMobil for between 500,000 t/y to 1.5m t/y for the steel mill. "They are mainly talking to LNG producers," he says.

"I have also heard they are talking to three other LNG suppliers, including Adnoc LNG, but I can't confirm it." Total announced a five-year LNG deal with AMNS on May 20 (2021) to supply up to 500,000 t/y LNG until 2026.

"But this is just a quarter of AMNS's projected LNG requirement over the next five years," adds our source. He speculates AMNS chose to take only 500,000 t/y of LNG from Total because it does not want to depend on a single supplier.

"Rather AMNS would prefer separate 500,000 t/y year contracts with three to four different suppliers," we hear. All the upcoming deals are likely to be for five years or more.

"Total has signed two different contracts with AMNS for up to 500,000 t/y LNG," we hear. "One contract was for half the quantity in December (2020) and one in March (2021) for the other half."

He adds that one contract is benchmarked against the Japan Korea Marker (JKM) and the other to Brent. "AMNS secured a good price under the Brent-linked deal," we hear.

"It is at less than 10% of the prevailing Brent price." Total will source LNG for AMNS from its stakes in liquefaction plants in Angola, Australia, Egypt, the UAE, the US, Nigeria, Norway, Oman, Russia and Qatar.

AMNS plans to import most of the LNG at Shell's 5m t/y Hazira LNG terminal near its steel mill. "Some cargoes will also land at Dahej," we hear.