INEOS announced a long-term supply agreement with SP Chemicals to deliver ethane from U.S. shale gas to China. The agreement, which will see U.S. ethane from shale gas shipped to China for the first time, will supply SP Chemicals with a long-term competitive supply of ethane for its industrial production.

The deal will involve the construction of a 95,000cbm capacity ship, which is expected to be delivered in 2019. Known in the U.S. as a ‘Very Large Ethane Carrier’ or VLEC it will be the largest ethane carrier in the world and will ship U.S. ethane from shale gas to SP Chemicals’ new gas cracker facility, currently under construction in Taixing City, Jiangsu province, China. As with the INEOS Dragon ships, this vessel will be operated by EVERGAS. It will be the first VLEC in their fleet of 23 gas ships. The ship will be built in China under the management of the JACCAR Group.

Ethane is used to make ethylene – one of the world’s most important chemical building blocks. Ethylene is an important raw material used to make products for a wide variety of industrial and consumer markets such as transportation, electronics, textile and construction.

”This is another world first for INEOS after importing shale gas to Europe in 2015. By bringing in U.S. 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. We are excited to work with a client such as SP Chemicals and we look forward to delivering this historic project,” David Thompson, CEO of INEOS Trading and Shipping, 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 the U.S.A. to Taixing City, Jiangsu province, PRC. It has long been a dream for SP Chemicals to integrate upstream. SP Chemicals will commission a gas cracker plant in 2019 to produce 650,000 tons per annum of ethylene. This first long-term supply agreement for ethane with INEOS will be an important milestone for SP Chemicals to achieve self-sufficiency for its ethylene requirements,” Chan Hian Siang, CEO of SP Chemicals, said.

SP Chemicals manufactures chlor-alkali products and related downstream products, with annual production capacities of 750,000 tons per annum (“tpa”) for caustic soda, 660,000 tpa for chlorine, 135,000 tpa for aniline, 500,000 tpa for VCM, and 320,000 tpa for styrene monomer. SP Chemicals sells mostly to customers who are based in Jiangsu, Zhejiang and Shandong provinces, as well as Shanghai. SP Chemicals also exports its products to the U.S.A., Australia, Japan and Korea. SP Chemicals’ customers include multinational corporations, such as BASF and Akzo Nobel, and PRC state-owned and private enterprises, in a diverse range of industries, such as petrochemicals, textiles, paper, consumer goods, plastic polymers, rubber, dye and pharmaceuticals.