Russia plans to open sea terminal for LPG exports to Asia by 2026

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Russia will likely open its first liquefied petroleum gas (LPG) terminal on the Pacific Ocean coast with joint investments from China by the end of 2025, two industry sources said on Wednesday.

Last week, Russian Direct Investment Fund (RDIF) struck an agreement with Chinese petrochemical company Haiwei to finance the marine terminal in Russia’s Far East to ship LPG. It did not provide the timings for the project completion.

The agreement, signed ahead of President Vladimir Putin’s visit to China on May 16-17, envisages investing 7 billion roubles ($77.63 million) in the terminal with annual capacity of 1 million metric tons.

Total investments are seen at around 30 billion roubles.

Traders said LPG supplies from the terminal would make it possible for Russia to reach consumers in the east and south of China, as well as Vietnam, South Korea, Indonesia and other countries.

The terminal in the Sovetskaya Gavan (Soviet harbor) port will help facilitate continuous redirections of Russian energy resources’ exports to Asia from Europe, which introduced sanctions against Russian LPG over the conflict in Ukraine.

China is the world’s largest consumer and importer of LPG, or combination of propane and butane, mainly used as fuel for cars, heating and to produce other petrochemicals.

China’s imports of LPG jumped about 46% to 3.08 million metric tons in March from February, customs data showed last month. The United States remained the top supplier for March with 1.6 million tons, up 38% from the previous month, the data showed.

LPG imports this year may surpass last year’s record of 32 million tons, Chinese consultancy Longzhong Information said.

Russian private company Remstal started terminal construction around five years ago. The construction works have been suspended due to lack of financing and Remstal’s owner, Rifkat Badrutdinov, told Reuters the company expects to resume construction once funds arrive.

Russian LPG exports to China has been steadily rising in the past few years. The terminal will allow increased exports via the sea whereas currently Russia supplies this fuel to the neighbouring country only via rail and roads.

China so far accounts for a small portion of Russia’s LPG exports. It stood at 4.3%, or only 150,000 tons out of a total 3.496 million tons of Russian exports of LPG via rail in 2022.

In 2023 it rose to 5.6%, or 202,000 tons, while in January – April 2024 it stood at 8.9%, or 106,000 tons.

Source: Reuters