Gas supply crisis caused by Arxen severely impacts the finances of the Alunorte refinery, owned by Norsk Hydro, with estimated multimillion-dollar losses.
Norsk Hydro has significantly raised its projection of financial losses resulting from the interruption of energy input supplies to the Alunorte refinery, located in the state of Pará.
The operational setback occurs after Celba—associated with the Brazilian operation of the former New Fortress Energy and recently rebranded as Arxen—failed to deliver the contractually agreed volumes.
With the supply disruption, the mining and metallurgy giant projects an additional negative impact between $90 million and $110 million for the fourth quarter alone.
Adding this figure to the estimated shortfall of $75 million to $100 million recorded in the third quarter, the total amount of the crisis could reach the striking mark of $210 million.
Spot market alternatives and new costs
To keep its operations running, Alunorte had to seek emergency alternatives, starting to purchase the input directly on the spot market.
LNG imports are taking place through autonomous operations enabled by the regasification terminal operated by Arxen itself, following authorization issued by ANP.
The disparity between the prices originally agreed upon in the contract and the high prices charged in last-minute purchases is the main driver of this financial imbalance.
The company reported that it continues to work on a long-term solution for gas supply under competitive conditions, although details regarding suppliers or confidential terms have not been disclosed.
History of legal disputes and industry impacts
Disagreements between the refinery management and the energy supplier go back a long way, even culminating in an arbitration proceeding initiated at the ICC.
In addition, Arxen is seeking regulatory flexibility from Aneel to change dispatch rules for its thermal power plant in the northern region, adding further complexity to the energy landscape.
Despite recent turbulence and the temporary reduction in alumina production recorded in previous months, Norsk Hydro management assures that it does not foresee any further sudden shutdowns in the energy flow.
Market attention now turns to the pursuit of regulatory stability and new structural agreements capable of shielding the industrial sector against extreme volatility.
