Ineos Orders Ethane Carriers to Supply LNG

05.12.2022 - UK-steered petrochemicals giant Ineos has signed long-term charter agreements with Japan’s IINO Kaiun Kaisha line for delivery of two Very Large Ethane Carriers (VLECs) with a volume of 99,000 cbm, initially to supply liquefied natural gas (LNG) to Germany.

The shipping line with a long history of transporting liquefied gas is venturing into VLEC ownership for the first time, as Ineos notes. When taking delivery of the carriers in 2025 and 2026 respectively, the chemical producer said its ethane fleet will expand to ten VLECs and eight Dragon class ships, making it the owner of the world’s largest such fleet.

David Thompson, CEO of Ineos Trading & Shipping called the deal with the Tokyo-based shipper “another major step that signifies our ongoing growth in ethane trade.” The company began leasing carriers about a decade ago to transport ethane from US fracking operations to its olefins and polyolefins production sites at Grangemouth, Scotland, and Rafnes, Norway,

Ineos’ first shipment to the land-based LNG terminal under construction at Brunsbüttel on the German North Sea coast will come from the Port Arthur, Texas, base of Sempra Infrastructure, with which it has signed a long-term sales and purchase agreement.

Terms of this deal include a 20-year commitment to take 1.4 million t/y of the liquefied gas from Sempra’s Phase 1 facility under development at Port Arthur. The partners have also signed a non-binding agreement covering an additional 0.2 milion t/y of LNG from Phase 2.

Sempra’s already approved Port Arthur project is expected to include two natural gas liquefaction trains as well as LNG storage tanks and associated facilities capable of producing, under optimal conditions, as much as 13.5 million t/y of LNG.

Ineos has also signed a long-term pact to supply regasification capacity at the Brunsbüttel terminal, which will have throughput capacity of 8 billion cbm/y of natural gas and can be expanded to at least 10 billion cbm /y. The first deliveries are expected in 2027.

The terminal operator, German LNG (GLNG) has signed long-term regasification agreements with its founding customers — in addition to Ineos, US energy giant ConocoPhillips and German energy utility RWE. GLNG is now in the process of securing the final permits to fully develop the facility.

Brian Gilvary, Ineos Energy chairman, said the contract with Sempra Infrastructure and the regasification deal for Brunsbüttel secure key areas of the value chain for the company across the Atlantic corridor and represent a major step forward at a time of significant transformation in the energy industry. They will also help alleviate structural energy deficits in Europe, he said.

“The agreements are an important part of our strategy as we build a network of liquefaction, shipping and regasification capacity to deliver affordable and reliable energy to our businesses and customers globally”, added David Bucknall, CEO of Ineos Energy. The chemical producer said it plans to market the US-sourced LNG globally as well as supply its own industrial needs in Europe.

Author: Dede Williams, Freelance Journalist