China's Fujian Refining & Petrochemical (Frep) replaced some naphtha feedstock for its ethylene cracker with butane from the start of July, as LPG prices remained at steep discounts against naphtha values.
Frep's 240,000 b/d refinery is a joint venture (JV) between Chinese state-controlled energy firm Sinopec, ExxonMobil, and state-controlled Saudi Aramco. The plant is located in Quanzhou, Fujian province, and its 1mn t/yr ethylene cracker can run on both naphtha and LPG. The plant consumes 20,000-25,000 t/month of LPG, or 10pc of its total feedstock requirement.
The plant's ethylene cracker ran on naphtha in April-June, when butane and propane values were at a premium to naphtha. But a surge in naphtha prices in June as a result of strong ethylene margins and tight supplies reversed the price relationship.
LPG imports into the Quanzhou terminal were about 74,000t in the second quarter of the year, lower by 27pc on the year, according to data from oil analytic company Vortexa. Quanzhou terminal typically sells half its LPG supplies into the residential sector, with the other half consumed by Frep's ethylene cracker.
Other ethylene crackers in China with feedstock flexibility are also eyeing LPG purchases. The CNOOC-Shell JV in Guangdong province that has a 1mn t/yr ethylene cracker is considering using LPG from CNOOC's 440,000 b/d Huizhou refinery, and could consume some 20,000 t/month of LPG. Negotiations are underway. The JV is also monitoring the cracking economics of butane, but has not indicated any intention to switch.
