Phillips 66 LPG export terminal on schedule

OREANDA-NEWS. February 02, 2016. Narrower arbitrages for US LPG exports will not impact the profitability for terminals in the years ahead, Phillips 66 chief executive Greg Garland said today.

"We're going to have to export propane to make things work for the next several years in this country," Garland said on an earnings call. Phillips 66's 150,000 b/d LPG export terminal near Freeport, Texas, remains on schedule to start operations in the second half of this year. Operations at its new fractionator in Sweeny, Texas, which will support the terminal, commenced in December.

Garland said Phillips 66 has already made "great progress" in securing long-term contracts for takeaway capacity from the terminal, which will be able to load about eight VLGCs per month.

"The arb between the US and other markets in the world are narrower, but we see shipping constraints being alleviated," Garland said. "On the longer term we feel there is going to be a significant commercial opportunity, but the primary opportunity on that project is the fees."

Chevron Phillips Chemical's US Gulf coast petrochemical project, which will boost its ethylene and polyethylene capacity by more than 40pc, is on schedule for completion in mid-2017.

Chevron Phillips Chemical reported \\$212mn in earnings during the fourth quarter, down \\$40mn from the prior quarter, because of lower margins and maintenance during the period, which reduced operating rates in its olefins and polyolefins segment from 94pc to 92pc quarter-over-quarter.

Lower commodity prices compressed margins on olefins and polyolefins during the quarter, said president Tim Taylor, but the demand outlook is stable in early 2016.

"We continue to see good demand. We don't see inventories building," Taylor said. "We look at the underlying fundamentals, barring a significant change we would expect similar industry margins as we saw in the fourth quarter."