Chinese polyurethane producer Wanhua Chemical Group is stepping up its presence in the shipping business with orders for very large ethane carrier (VLEC) newbuildings worth about $512m.
Shipbuilding sources said the state-controlled company has inked up to four 99,000-cbm ethane carriers at Jiangnan Shipyard. The order is for two firm vessels plus two options.
Officials at Jiangnan declined to comment on the shipyard’s newbuilding contracts, citing contract confidentiality. Wanhua Chemical was not contactable.
Shipbuilding sources said Wanhua is paying about $128m each for the ethane dual-fuelled gas carriers. It is slated to take delivery of the firm vessels in 2025.
More known as a gas carrier shipbuilding specialist, Jiangnan recently delivered the world’s first IMO type-B tank VLEC. It delivered the 99,000-cbm ethane carrier Pacific Ineos Belstaff to Pacific Gas, the gas carrier arm of Shandong Shipping.
The Pacific Ineos Belstaff was one of a pair of VLECs that were originally ordered by Pacific Gas at the end of 2019 on the back of a long-term charter contract with chemical giant Ineos. The VLEC was fitted with two type-C deck mounted tanks.
Shipbuilding sources said Wanhua is building a second ethylene cracker project at Yantai, where the company is based. The facility, which is due to be ready in June 2023, will be importing ethane from the US as feedstock. The plant will also use naphtha and C4s as feedstock.
Wanhua is the second Chinese company that will be involved in importing US ethane to China. The first was Zhejiang Satellite Petrochemical (STL), China’s largest acrylic acid and acrylates manufacturer.
Shenzhen-listed STL is shipping ethane into China with six VLECs that it chartered from Malaysian shipowner MISC Berhad. The volume of ethane it is importing will increase as it is also behind the order of eight VLEC newbuildings that are under construction at shipyards in South Korea and China.
STL has entered chartered contracts with Eastern Pacific Shipping for six newbuildings and two vessels with domestic owner Tianjin Southwest Maritime. STL has chartered the VLECs for 15 years.
The difference between STL and Wanhua is that the former has no desire to be a shipowner.
Wanhua diversified into shipowning in 2019, when it teamed up with Adnoc Logistics & Services to order five LPG-fuelled 86,000-cbm VLGC newbuildings at Jiangnan.
The joint venture company called AW Shipping is scheduled to take delivery of two vessels this year and the remaining three in 2023. The VLECs will transport LPG from Abu Dhabi to China.
Wanhua and Abu Dhabi National Oil have an agreement on a 10-year LPG supply contract worth up to $12bn.
The VLEC business is a niche sector. Gas shipping sources said there are 15 VLECs on the water and nine newbuildings under construction at shipyards in South Korea and China.
They are expecting China to be importing more ethane in the future and more VLECs will be ordered.
New York-listed Energy Transfer established an office in Beijing in 2019 to expand its presence in China to meet growing demand for ethane and liquid natural gas products.
