India to take delivery of 2 LPG cargoes from Sibur, opening new route from Russia

Singapore — India will take delivery this week of the first two LPG shipments from Russia's top petrochemical firm Sibur, opening a new trade route from the major oil and gas producing country, which is exploring new markets after European demand plunged amid the coronavirus pandemic, according to cFlow, Platts trade-flow software, and trade sources.

The 19,002 dwt Navigator Luga, with 12,700 mt of butane, is due to arrive on Wednesday at Nhava Sheva port near Mumbai, after departing Russia's Ust Luga port, west of St. Petersburg, on April 19, Platts cFlow showed.

The 22,911 dwt Navigator Libra departed from Ust Luga on April 21, according to cFlow, carrying 11,900 mt of propane, which trade sources said is also bound for Mumbai. the Medium Gas Carrier is currently in the Persian Gulf and is first en-route to Sohar in Oman, Platts cFlow showed.

The lifters of the two medium-sized cargoes are not immediately known.

Nhava Sheva terminal, also known as Jawaharlal Nehru Port, or JNPT, is a regular LPG discharge port for cargoes taken by state-run Bharat Petroleum Corp. Ltd. The company, however, could not be reached for comment.

Analysts said it was likely that Indian buyers were able to get attractive prices for the parcels due to poor European demand for domestic heating fuel in the ARA region and for petrochemical feedstock.

The destruction of demand for oil products due to COVID-19 lockdowns in Europe had also forced refineries to cut runs or shut down for maintenance.

Northwest Europe has seen a decline in demand for petrochemical cracking and gasoline blending, which kept butane prices in that region below those of North Asia, prompting arbitrage opportunities and sending some 149,000 mt of LPG to North Asia in April, double what was shipped a month ago, Platts cFlow showed.

INDIA DIVERSIFIES SUPPLY SOURCES

Indian importers have also been diversifying supply sources whenever shipments from key suppliers in the Middle East are disrupted, or become costly due to competition from China. The world's second largest LPG buyer have taken cargoes from the US, North Sea, West Africa and the Mediterranean in recent years to secure supply of the politically sensitive domestic fuel.

To avoid panic buying due to extended lockdowns over March 21 to May 4,

Indian Oil Corp. and two other state-run importers -- Hindustan Petroleum Corp. Ltd. and BPCL -- bought via tenders a total of almost 500,000 mt of evenly-split LPG for April to June deliveries. In late March, Indian Petroleum and Natural Gas Minister, Dharmendra Pradhan said the country will also receive prompt LPG supplies from Saudi Arabia.

India's LPG production rose almost 4% month on month to a record high 1.163 million mt in March, data from the Petroleum Planning and Analysis Cell showed, in anticipation of increased consumption due to the lockdown.

India's LPG consumption rose 12.2% year on year in April to 2.132 million mt, though it dipped 7.5% month on month, PPAC data show.

Traders were mixed on whether this new trade route from Russia would persist.

"It may be only one-off, I believe," one trader said. "India may be better off buying from Algeria," he said adding that Russian cargoes could also be sold to buyers in the Mediterranean.