Far East Gas Delays LPG Terminal Launch

Joint venture Manzhouli Far East Gas has postponed the launch of a liquefied petroleum gas (LPG) and propylene terminal at the Russian-Chinese border until June 2016, a partner in the venture said.

"This timeline is due to the fact that the construction season in Manzhouli ends November 30, 2015 and will not resume until next April. There are also stricter requirements for acceptance, handling and transportation of dangerous chemicals in China, which requires more time to obtain all the necessary licenses and permits," said Avestra Group, which includes Avestra (Beijing) Chemical Commerce Trading Co. Ltd, one of the four partners of Manzhouli Far East Gas, in a statement on its website.

The other partners in Manzhouli Far East Gas are state-owned Chinese companies Heilongjiang Harbin Railway Foreign Economic Trading Co., Heilongjiang Anruijia Petrochemical Co. Ltd, a Petrochina (PCCYF) subsidiary, and Heilongjiang Province LongYou Petrochemical Group Ltd, which owns a refinery in China with a capacity of 5.5 million tonnes a year.

LPG and petrochemical products supplied via the terminal will be an alternative to supplies from the US and Gulf countries, Avestra said.

LPG demand in north-eastern China was about 1.2 million tonnes in 2014 and is likely rise to 1.4 million tonnes in 2015 and 2 million in 2016, said Avestra Group.

Companies such as Sibur, Rosneft and Irkutsk Oil Company have expressed interest in using the terminal for LPG exports. Irkutsk Oil plans to begin producing LPG early next year.

Rosneft signed a cooperation agreement in September with Avestra Chemical and Manzhouli Far East Gas for annual shipments of 60,000-200,000 tonnes of LPG and propylene to China through the border crossing in Russia's Zabaikalsk, where the terminal is located.

The terminal was initially slanted for launch in the fall of 2014 with a capacity of 1 million tonnes. Avestra moved the launch back several times while expanding the capacity to 3 million tonnes. The terminal is also expected to handle up to 500,000 tonnes of liquefied natural gas (LNGLF) a year in tanks.

THE NUMBERS
China increased LPG imports by 72.4 percent, over the period January-September, to 8.406 million tonnes, according to Chinese customs data. The top three suppliers were United Arab Emirates with 3.851 million tonnes, or 45.8 percent of the total; the US with 1.939 million tonnes (23.1 percent); and Kuwait with 509,373 tonnes (6.1 percent).

Sibur, Russia's biggest LPG producer and exporter, became the first Russian company to supply China in the summer of 2014. Gazpromneft delivered its first LPG shipment to China via Kazakhstan in late 2014.

China raised LPG exports by 67 percent in 2014 to 6.949 million tonnes, according to Chinese customs data.

By Damir Khalmetov