RIPET, Marcus Hook LPG origins proposed for Ginga terms

Japanese buyers of Canadian LPG proposed adding AltaGas' Prince Rupert export terminal as an accepted origin under standard Ginga contract terms for 2021.

AltaGas' Ridley Island terminal (RIPET) loaded its first propane cargo in May 2019, and since that time has averaged two very large gas carrier (VLGC) cargoes per month bound for destinations in Asia. In April, AltaGas said it was on track to boost throughput at the terminal to 50,000 b/d by the end of this year, and in November applied with Canadian regulators to boost export capacity to 80,000 b/d.

Adding AltaGas as a point of origin under Ginga contract terms, which are standard in Asia, would allow RIPET cargoes to be included in the Far East Index (FEI).

The Ginga forward contract is based on standardized terms and conditions, such as acceptable origins, used to buy and sell 23,000t of physical propane and butane cargoes on a cfr Japan basis. Astomos, an anchor shipper at RIPET, proposed the change.

Growing LPG production in the US led to a surge in investments in new export terminal capacity in the last three years, including Energy Transfer's Mariner East 2 pipeline system, which provides takeaway capacity from fractionators in the Marcellus shale in the eastern US to the Marcus Hook, Pennsylvania, export terminal.

Gunvor is proposing Marcus Hook propane cargoes also be included in the Ginga contract, along with butane cargoes originating from Houston terminals at Targa and Enterprise, Energy Transfer's Nederland, Texas, export terminal, Phillips 66's Freeport, Texas, terminal, and Marcus Hook.

Vitol also requested butane cargoes originating from Enterprise's Houston LPG terminal, the largest facility in the US, be included in the accepted origins, noting that more US butane delivered into Japan and South Korea has left importers with sufficient experience regarding its quality. Gunvor also requested butane cargoes originating from Bethioua, Algeria, and the Tanjung Sulong terminal in Malaysia be included as origin terms in the contract.

Mercuria, another shipper out of Marcus Hook, is also proposing butane and propane cargoes out of the terminal be included as a point of origin in the contract. Total Oil Trading (Totsa) also proposed adding Marcus Hook to the contract.

The US arbitrage into Europe remained closed on paper during much of the first quarter, and vessel tracking showed more LPG carriers out of Marcus Hook headed for Asia.

By Amy Strahan