China’s Wanhua Chemical Group has signed a 10 year FOB term contract with Qatar Petroleum to import around 800,000 mt/year of LPG, the two companies said Wednesday.
Wanhua, based in Yantai in China’s north east Shandong province, signed the contract with Qatar Petroleum for the Sale of Petroleum Products Co. Ltd. (QPSPP) that begins in 2020 in Doha, said QPSPP in a statement. The price of the contract and the split between propane and butane of each cargo were not disclosed.
“This new agreement with QP is a further proof of how Wanhua is creating a long term and mutually beneficial partnerships with our strategic supplier. Wanhua, as a government-owned company and world leading chemical producer, will continue to work closely with QP to explore more opportunities to serve the ‘One Belt One Road’ strategy,” said Wanhua Chemical’s Group CEO Kou Guangwu.
The agreement underscores Wanhua’s aim of diversifying LPG supply sources, especially with Middle East producers amid the US-China tensions and as it seeks to boost LPG imports to about 5.5 million mt next year from 4 million mt ahead of new projects in Yantai and to widen trade activities in Asia, the company said.
“This agreement reflects our marketing strategy to increase direct sales of petroleum products with end users, specifically in China,” said Saad Sherida al-Kaabi, Qatar’s Minister of State for Energy Affairs as well as QP’s President and CEO.
“The Chinese LPG market continues to enjoy steady growth, and remains an important destination to Qatari energy exports.”
Wanhua Chemical also signed a 10-year FOB term contract with Abu Dhabi National Oil Co., or ADNOC, in November last year to import 1 million mt/year of LPG starting in 2019.
It was also in discussions with Saudi Aramco, Kuwait Petroleum Corp. and ADNOC, to increase term LPG import volumes for next year.
Wanhua’s current term contract with KPC comprises 10 cargoes of 44,000 mt evenly split LPG. Its contract with Saudi Aramco comprises about 440,000 mt in 10 VLGCs, while its current term purchase from Qatar is estimated at eight to 10 cargoes.
Wanhua is also due to award, by the end this week or the next, an import tender for 2020 supplies, comprising six to 12 cargoes for a monthly average of 33,000 mt propane and 11,000 mt butane.
Wanhua plans to start commercial production of its LPG steam cracker in Yantai, with an ethylene production capacity of 1 million mt/year in H2 2020, a company official told S&P Global Platts in an earlier interview.
The cracker will be the world’s first to consume almost 100% LPG as feedstock. Its main feed will be propane, with some butane and a tiny fraction of ethane that is a by-product of its PDH plant.
Wanhua Chemical operates a 750,000 mt/year propane dehydrogenation plant and a PO-MTBE plant with integrated downstream units at Yantai. The PDH plant is able to process 900,000 mt/year of propane, while the PO-MTBE plant is able to process 700,000 mt/year of butane.