In the next few weeks the first ship bringing US shale gas to Europe will arrive on the southern shores of Norway, marking an end to Ineos’ search for cheap feedstock to power its European petrochemical assets. Plagued by $100/b oil, European petrochemical producers in 2012 were struggling with margins and started looking abroad for cheaper feedstock options. The contracting European margins coincided with plentiful and inexpensive supplies of ethane-rich natural gas in the United States. Ineos’ $2-billion deal to build ships and storage facilities to import US gas for its flagging assets in Europe looked like a no-brainer. At the time, NWE naphtha was trading at a premium of $720/mt to Mont Belvieu,Texas, ethane, according to Platts data. This price differential was more than enough to cover the high logistical costs associated with moving volatile ethane some 3,500 miles across the Atlantic. Fearing being left behind, Borealis, Sabic and Reliance rushed across the Atlantic to sign similar deals, pledging hundreds of millions of dollars to charter the as-yet unbuilt ships to transport the gas. But as Ineos’ first so-called Dragon-ship docks at Rafnes steam cracker in Norway this quarter, the cruel irony is that the ethane cash cow has
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Source: CTRM Center