BEIJING, March 14 China's largest state refiner,
Sinopec Corp, said it had entered a long-term deal to
buy liquefied petroleum gas (LPG) from Phillips 66,
showing the U.S. shale drilling boom is having an impact on
The U.S. shale boom in recent years has led to a surge in
production of LPG, or propane, which is bringing down global
prices and challenging established suppliers in the Middle
East. LPG can be used for heating, transportation
fuel or for making petrochemicals.
"It has further diversified the chemical feedstock supply
channels for Sinopec," Dai Houliang, Sinopec's senior vice
president, said in a statement on Friday.
Sinopec, which plans to use the LPG as a petrochemical
feedstock, didn't give any details of the contract, the amounts
or when the supply starts.
Last June, the top Asian refiner proposed a $3.1 billion
ethylene plant in east China that would be Sinopec's first to
use natural gas and LPG as a feedstock.
Phillips 66 said last October it would develop a $1 billion
LPG export terminal at Freeport, Texas, with a capacity of 4.4
million barrels per month, with start-up planned for the middle
U.S. propane exports are estimated to rise to 350,000
barrels per day in 2015 from 196,000 bpd in 2012.
Analysts say the U.S. LPG export boom will be further aided
by the expansion of the Panama Canal, allowing the passage of
so-called very large gas carriers (VLGC) from 2015 and reducing
the cost of freight by cutting the sailing time from the United
States to Asia by more than two weeks.