INEOS, Evergas sign long-term deal to bring US ethane into Europe

23 January 2013 12:11 Source:ICIS News

LONDON (ICIS)--INEOS Europe, a business within Switzerland-headquartered chemical major INEOS, on Wednesday entered into 15-year shipping agreements with petrochemical gas transporter Evergas for the delivery of ethane into Europe from the US.

Financial details of the agreement were not disclosed.

Under the agreements, Copenhagen-based Evergas, formerly Eitzen Gas and Eitzen Ethylene Carriers, will build and operate medium-sized liquefied natural gas (LNG) carriers with a cargo capacity of 27,500 cbm, dedicated to the transportation of ethane from Marcus Hook, Pennsylvania, in the US, to INEOS's gas cracker in Rafnes, Norway.

The new vessels will enter into service in 2015.

The agreements with Evergas follow the recent completion of supply and infrastructure deals by INEOS to access ethane feedstocks from the US for use in its European cracker complexes, and the announcement of the construction of a new ethane tank in Rafnes.

David Thompson, procurement & supply chain director at INEOS Olefins & Polymers North, said: "These shipping agreements are the final piece of the Mariner East Project, allowing INEOS to import competitively-priced ethane to our Rafnes cracker from the US.”

On 26 September 2012, INEOS announced it had completed supply agreements with US-headquartered shale gas producer Range Resources-Appalachia, securing it a significant volume of ethane feedstock from 2015 for its European cracker complexes.

Under the deal, ethane would be piped from Houston, Pennsylvania, to Marcus Hook, Pennsylvania, from where it would be shipped to Europe. At the same time INEOS finalised pipeline transportation services and terminal services agreements with subsidiaries of US-based gasoline giant Sunoco.

The ethane would be transferred from Marcellus shale reserves in the Appalachian region to Marcus Hook via Sunoco’s planned Mariner East pipeline project. Mariner East is a $600m (€462m) pipeline project, with an initial capacity to deliver 70,000 bbl/day of propane and ethane from Marcellus Shale areas in western Pennsylvania to Sunoco’s facility in Marcus Hook.

On 4 December 2012, INEOS also confirmed it will invest in the construction of a new ethane tank at its Rafnes site. The chemical major signed a letter of intent with Germany’s TGE Gas Engineering to build the tank and expand related infrastructure at the Rafnes site, with the facility expected to be operational from the second quarter of 2015. INEOS said on Wednesday that construction work has already started.

“The ethane imported from the US will allow INEOS to enhance the competitiveness of its business in world markets and as a consequence, secure the long-term future of its sites in Europe,” the company added.

Additional reporting by Tracy Dang and Tom Brown

($1 = €0.75)

By Franco Capaldo