Petrochemical giant Ineos has signed a long-term agreement to supply ethane produced from US shale gas to Chinese chemicals firm SP Chemicals for its industrial production.

First delivery of the US ethane, which will be done through a 95,000cbm capacity ship, is slated for 2019.

As part of the deal, a very large ethane carrier (VLEC) ship will be constructed in China under the management of maritime conglomerate Jaccar Group.

The VLEC will transport US ethane from shale gas to a new gas cracker facility which is being constructed by SP Chemicals in Taixing, China.

It will be operated by shipping company Evergas, which operates the Ineos Dragon ships as well.

The VLEC will be the first of its kind in the fleet of Evergas’ 23 gas ships.

Ineos Trading and Shipping CEO David Thompson said: “This is another world first for INEOS after importing shale gas to Europe in 2015.

“By bringing in US ethane from shale gas to China for the first time, we are now leading the way in shipping ethane worldwide to meet the needs of an expanding chemicals sector.”

SP Chemicals, which will use the imported ethane, will commission the new gas cracker plant in 2019. It will have production capacity of 650,000 tons per annum of ethylene.

The first long-term ethane supply agreement signed by SP Chemicals with Ineos is expected to play a major role in the Chinese chemical firm in achieving self-sufficiency for its ethylene requirements.

SP Chemicals CEO Chan Hian Siang said: “SP Chemicals is honoured and very happy to work with INEOS, a first-class global company, to ship ethane over a journey of more than 18,900 km across the Pacific Ocean from USA to Taixing City, Jiangsu province, PRC. 

“It has long been a dream for SP Chemicals to integrate upstream.” 

Image: Signing of the long-term agreement for ethane supply between Ineos and SP Chemicals. Photo: courtesy of Evergas.