New terminal marks LPG sea change

26 July 2013 08:50  [Source: ICB]

A major new seaport being developed in Russia will allow SIBUR to target northern and western European markets with its surplus LPG

Russia's liquefied petroleum gas (LPG) production is growing rapidly, with forecasts suggesting it will total 16.4m tonnes/year by 2015, up from 9.7m tonnes/year in 2010.

Although most of the output will be supplied to the domestic market as a feedstock and fuel to the thriving utility sector, there is still likely to be an excess in supply in the coming years because of insufficient growth in the petrochemical market. Consultancy Nexant forecasts global LPG production growth at an average of 2.4%/year from 2011-2020, climbing to 312m tonnes/year by the end of the decade. Russian LPG consumption is expected to grow at around 2.8%/year through to 2020 with production expected to grow at an average rate of 2.7%/year over the same period. With such intensive production growth expected, SIBUR decided to pledge significant investment into developing extensive export infrastructure.

SIBUR is Russia's leading producer of LPG with 34% of the domestic market. In 2012, the company processed 18.7bn cubic metres of associated petroleum gas (APG).

Its decision to invest in a 138 hectare (341 acre) transhipment complex, located at the Ust-Luga commercial seaport in the Leningrad Region in the northwest of Russia, means SIBUR will now be able to tap into new routes and markets, and ship LPG cargoes throughout northwest Europe.

The company signed a memorandum with Ust-Luga Company for the construction of the terminal in 2007 and local authorities approved the plans. In June that year, SIBUR established SIBUR-Portenergo, the operator of the LPG export terminal.

Ust-Luga is a multipurpose seaport on the border of Russia and the EU, in the Gulf of Finland, with direct access to northwest Europe. It boasts the largest LPG tank storage capacities in Russia and the Commonwealth of Independent States (CIS) and is also the only terminal in the region with refrigerated LPG tanks. It also has the advantage of year-round operation, with shipments not restricted by ice.

The project required significant dredging work in the mooring area, removing soil to increase the water depth from 1.6-4.5 metres to 13.5 metres. The terminal will be able to accommodate ships, gas carriers and tankers up to 185 metres in length, with an overall deadweight of up to 48,000 tonnes.

The terminal will feature an isothermal LPG storage, says SIBUR. The cooling of the liquefied gases will allow bulk transportation since cargo capacity of a refrigerated LPG carrier is comparable to the capacity of as many as 10 conventional pressure-type gas carriers.

It is also well supported in terms of infrastructure, with railway access, full transhipment facilities, an onsite laboratory and customs.

The first LPG carriers arrived in late June. The complex is designed to handle up to 1.5m tonnes/year of LPG and 2.5m tonnes/year of light oils.

By: Andy Brice
+44 20 8652 3214

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