Iran’s LPG exports jump amid US-China trade spat

LPG shipments scheduled to be lifted from Iran in April rose further to around 500,000 mt, almost matching January shipments of 520,000 mt which was the highest volume since Western sanctions against the Middle Eastern producer were removed in January 2016, shipping sources said.

The April shipments were almost up 14% from March and will bring the total shipments so far this year to 1.86 million mt.

Most of the April cargoes are again bound for China, followed by Indonesia, India, Thailand and possibly Kenya, according to shipping sources and cFlow, S&P Global Platts trade flow software.

Oriental Energy, which operates propane dehydrogenation plants in China, has lifted a cargo comprising 34,000 mt of propane and 14,000 mt butane aboard the VLGC Gas Aquarius at Assaluyeh from Iranian Gas Commercial Co. The vessel is due to arrive at Qinzhou April 25, cFlow showed.

OE, which loads its cargoes via a trading entity called Pacific Petrochemical, has also lifted a cargo comprising 33,000 mt propane and 11,000 mt butane from Persian Gulf Petrochemical Industry Commercial Co. at Bandar Imam Khomeini aboard the Pacific Yantai. The vessel, which is now in the Gulf Of Oman, is due to arrive in Ningbo May 12, cFlow showed.

OE, also an LPG trader and distributor, early this month sealed an agreement with Hong Kong-based energy trader Kunlun Holding to set up a pool of VLGCs, which is expected to be completed by end May, as well as to cooperate in boosting LPG trade.

Under the deal, OE will manage Kunlun's LPG storage facilities and buy 2.5 million mt/year of LPG from Kunlun between now until 2020.

Under a related pact, Oriental Petroleum -- the controlling shareholder of OE -- will transfer its lease for eight VLGC newbuildings to Kunlun Shipping, a unit of Kunlun Holding, the company had said.

OE currently owns eight VLGCs while Kunlun has two VLGCS, which ply mainly over the Middle East-China route.

A Middle East shipping source said that Kunlun recently signed purchase contracts to lift three cargoes/month from Iran. Under the deal with PGPICC, it will lift two cargoes/month, and with IGCC, it will take one cargo/month.

These liftings from Iran come as OE was recently ordered by a Texas state district court to pay $523.8 million in damages to Germany's Mabanaft following an LPG contract dispute. Siding with Mabanaft last October, the court had ruled that OE had breached its contract by failing to provide a letter of credit ahead of its first scheduled shipment of propane from the US Gulf.

China also plans to raise import duty on US propane to 25% -- a retaliatory move that threatens to worsen the US-China trade war if it is implemented -- which traders and analysts said could shift China's import focus to the Middle East, including Iran.

SS