Enterprise ethylene terminal 75% contracted: JV partner

Houston — Enterprise Products Partners' ethylene export terminal on the Houston Ship Channel is now contracted for 75% of its 1 million mt/year capacity on a take-or-pay basis, and Navigator Gas, its 50% partner in the venture, does not foresee operational disruptions that would force a writedown on the investment amid the coronavirus pandemic uncertainty, according to Navigator.

The London-based company also said it had not seen any "significant" decrease in charter rates as a result of the pandemic, but vessel utilization had declined from 96.3% in December and 97.3% in January to mid-80% levels last seen in mid-2019, Navigator said Saturday.

Customers "are being more cautious with inventory management and consumption, with fallout seen in frequency and number of cargo quotes, thus reducing vessel utilization," Navigator said.

"While certain positive signs are coming from China with respect to workers returning to manufacturing sites and travel bans being eased, significant uncertainty remains as to the speed of economic recovery in areas affected by the COVID-19 pandemic," the company added.

Navigator provides sea transportation and distribution to oil majors, chemical companies and energy trading companies. Navigator said it expects those customers to be able to maintain the ability to pay for vessels under charter at least through the next six to 12 months.

Q4 NET LOSS OF $2.8 MILLION

The London-based company reported a net loss of $2.8 million for the fourth quarter of 2019, compared with a $3.9 million net loss in the same period in 2018.

The terminal shipped out its first cargo, about 11,300 mt, aboard the Navigator Europa on January 2. The vessel sailed for China, Navigator said on Saturday.

On January 2, the spot US ethylene price was 16 cents/lb FD Mont Belvieu. The price rose to 22 cents/lb on January 13 and 14, but has since fallen 63% since, repeatedly hitting all-time lows for the period since S&P Global Platts began assessing spot ethylene in 2004.

The April price was last assessed Friday at 8 cents/lb FD Mont Belvieu, a new all-time low. The US ethylene contract price for March also settled at a record low on April 2, falling more than 9% to 21.75 cents/lb, eclipsing the previous all-time low of 23.50 cents/lb in June 2019.

Navigator said the pandemic may restrict seaborne transportation of products, including liquefied petroleum gas (LPG) and petrochemical products.

"The impact of COVID-19 on global economic conditions and the operations of businesses throughout the world is evolving rapidly and the ultimate severity and future effects are uncertain," Navigator said.

Adding: "Any restriction on the ability to transport LPG and petrochemicals to countries or continents could adversely affect our business, financial condition and operating results."

Navigator noted that its vessels sail worldwide and the company is not "overly dependent" on any one country or continent for its business, though the pandemic "has reduced manufacturing capacity and the demand for the consumption of the finished products."

The company owns 38 vessels and can move petrochemicals, LPG and ammonia.

"We have not thus far received any requests for cancellation of charters or reduction in committed charter rates," the company said.