April 30, 2020 / 11:50 AM / a month ago

Russia's Sibur to start LPG supplies to India in May as European demand tumbles

MOSCOW, April 30 (Reuters) - Russia’s largest petrochemical company Sibur will supply two cargoes of liquefied petroleum gas (LPG) to India in May for the first time ever as it looks for new markets after demand in Europe fell sharply due to the coronavirus outbreak, according to traders and shipping data.

Most European countries have been in lockdown since March amid the coronavirus pandemic, causing a drastic fall in fuel consumption. As LPG is widely used in Europe as motor fuel, it was hard hit by a lack of demand.

In India, though, LPG demand is seen rising this year despite the coronavirus as it is mostly used by private households as cooking gas and therefore in demand during the lockdown.

In March, LPG sales in India rose about 1.9% from February to 2.31 million tonnes, according to data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry.

Moreover, Indian authorities announced at the end of March that the state would provide free cooking gas cylinders to poorer citizens for three months, under a scheme meant to nudge them to adopt the cleaner fuel. The move is expected to trigger a surge in LPG sales later this year.

Sibur loaded a vessel, Navigator Luga, with 12,700 tonnes of butane on board on April 18 and another vessel, Navigator Libra, carrying 11,900 tonnes of propane on April 21 from Ust-Luga port for delivery to India’s Nhava Sheva port close to Mumbai, according to shipping data from Refinitiv Eikon.

The vessels are expected to arrive on May 11 and 14 respectively, the data shows. According to traders, more shipments of Russian LPG to India in the coming months are currently being negotiated.

Sibur LPG production reached 6.45 million tonnes in 2019, of which about a half was exported, according to the company’s data. Most of Sibur’s LPG sea exports were to northwest Europe in 2019, according to Refinitiv Eikon data.

Sibur didn’t immediately reply to a Reuters request for comment. (Writing by Olga Yagova; Editing by Susan Fenton)

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