Zhejiang Satellite Petrochemical (STL) is said to be on the hunt for another six very large ethane carrier newbuildings as it looks to expand a major project in China.

The Chinese company needs the ships for a planned second phase of an ethane cracker and terminal under construction in the Jiangsu province city of Lianyungang, industry sources said.

Talks with yards

STL is said to be holding talks with shipyards in South Korea to meet the newbuildings requirements, the sources said.

The Shenzhen-listed company has six 93,000-cbm VLECs under construction at two South Korean shipyards. The newbuildings — three at Hyundai Heavy Industries and another three at Samsung Heavy Industries — are slated to be delivered in the fourth quarter of this year and first half of 2021.

They will move cargoes for the first phase of the ethane cracker.

Industry sources said construction of STL plant's second phase is scheduled to be complete in mid-2022.

“STL requires six VLECs for each terminal,” said a shipping source. “It needs a total of 12 ethane gas carriers.”

Officials at STL were not available for comment.

TradeWinds is told that STL’s second batch of newbuildings will have the same 93,000-cbm capacity as its first, in order to fit the loading port in Houston.

Like the first phase of its ethane cracker, STL’s second phase plant will be able to produce 1.25m tonnes of ethylene per year, for which ethane is a feedstock.

Shipbuilding players said STL is holding newbuilding discussions exclusively with HHI and SHI.

South Korean preference

Sources do not know why the company did not approach Chinese shipyards to build the VLECs. There are at least three Chinese shipbuilders that have VLEC designs in their portfolios. They are state-owned Jiangnan Shipyard, Dalian Shipbuilding Industry Offshore (DSIC Offshore) and Hudong-Zhonghua Shipbuilding.

Meanwhile, shipbuilding sources said STL does not intend to own the VLECs.

“It wants another company to take over the ownership of the VLECs and it will then charter the ships from them,” said a shipbuilding source.

The company is actively seeking out a shipowner for the six VLECs that are currently under construction at HHI and SHI.

In a stock exchange announcement, the company said it is looking for interested shipowners to take over the soon-to-be delivered VLECs at a price of $717m. It would then sign period charters for the ships.

STL will receive its ethane from US firm Energy Transfer Partners. The two companies have a long-term agreement that will see Energy Transfer Partners provide around 150,000 barrels per day of ethane.

STL is a large-scale manufacturer of integrated acrylic acid. It is the largest of its kind in China and in the top five worldwide. It is involved in the industrial production chain from propane as feedstock to downstream products.