First US shale gas-based ethane shipments seen in Europe by end Q2

London (Platts)--13 Mar 2015 951 am EDT/1351 GMT

The first shipment of shale gas-based ethane will arrive in Europe from the US by the end of second quarter 2015, industry sources said on the sidelines of the European Petrochemical Luncheon in Brussels, Thursday.

Ineos pioneered the step for European crackers to import US ethane.

"Our first shipment of ethane from the US will arrive by the end of Q2," a source at Ineos said.

He added that the ethane would be received in Rafnes, Norway for its cracker.

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The company is building an ethane tank at its Rafnes site, and construction is expected to be completed within the next few months, he added.

The source added that he was not convinced the shale gas-based ethane from the US would affect the market.

"It is not additional capacity. It's simply using US shale-based ethane instead of European ethane -- it is a feedstock substitution to boost competitiveness."

Several petrochemical majors in Europe have announced plans and signed deals to import lower cost shale-gas based feeds to run their petrochemicals plants as a part of their strategy to stay competitive.

These include Saudi Arabia's Sabic for its Wilton, UK site, and Austria's Borealis for its Stenungsund site in Sweden.

Sabic plans to import its first shale gas-based ethane cargo from the US in Q3, 2016, a source at the company said Thursday.

The company previously announced it would modify its steam cracker at Wilton, England into a gas cracker to use US ethane by 2016.

However, the recent fall in crude prices has placed added scrutiny on the value of these imports.

Earlier this month, Borealis CEO Mark Garrett said that the rush by European buyers to import cheap ethane from the US may grind to a halt.

Companies like Shell and Versalis who said last year that ethane import deals were imminent have yet to announce them.

--Shashank Shekhar,
--Daved Chohan,
--Edited by Jonathan Dart,

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