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Ineos’ ethane vessel, world's largest, to boost fleet capacity 11%

HOUSTON, November 28, 2017 (PCW) -- Ineos says it will ship ethane to China’s SP Chemicals in 2019 and build the world’s largest ethane vessel for that voyage.

The ship, which is yet to be named, would be delivered in 2019 and at 95,000 cbm (about 900,000 standard barrels of ethane) would boost the current dedicated ethane fleet capacity by 11% to nearly 8.9 million barrels. (To learn more about the various dedicated ethane vessels that ship US supplies, read NGLs Week’s prior analysis on that subject HERE).

One cargo would provide SP Chemicals’ planned 650,000 mt/yr ethane cracker in Jiangsu province with about 24-25 days of supply, according to PetroChem Wire estimates. Currently, the largest ethane carriers on the water are Reliance’s six ethane vessels, each capable of transporting as much as 820,000 barrels. Reliance uses these vessels to move ethane from the Morgan’s Point terminal to its crackers in Jamnagar, India.

The one-way voyage takes roughly a month, which would likely be the same amount of time for a US Gulf Coast-China trip.

The addition of this vessel could significantly alter trade flows for the lightest purity product. For instance, in 2015, before the first two US ethane export terminals opened, the lion’s share of exports were headed – via pipeline – to Canada. In 2016, after both Marcus Hook and Morgan’s Point opened for business, Canadian pipeline exports made up only 51% of overall exports.

Though it was the still the predominant destination, Norway emerged as the runner-up at 35% of the total, thanks to Ineos’ fleet of Dragon ships that began providing taxi service from Marcus Hook to the company’s cracker in Rafnes, Norway. So far this year (US trade data’s most recent release is through September), while Canada remains the top destination (30%), India has emerged as a close second (29%). This is due to Reliance’s vessels, which diligently began plying the Houston-India route in late Dec 2016.

Top Exporter

Once the full 2017 export data is in, India should be the top exporter of US ethane. Once Ineos’ VLEC is delivered in 2019, it is more than likely China will emerge as a top exporter, and together with India, Asia will become the top region for US ethane cargoes, beating out Canada, in 2020. And it is also conceivable that ethane prices would then become more vulnerable to global fundamentals (i.e. plant/terminal outages in Asia and Europe) than they currently are, paving the way for greater price volatility in what has been an otherwise range bound market by the end of the decade.

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