Vietnam's VinaBenny has deferred plans to bring to Vung Tau, a VLGC, which the LPG trader intended to use as a floating storage, a source at one of the company's joint venture partners told Platts Friday.
"If you look at the freight rates at the moment, it doesn't seem sensible. It seems it would cost around $80 million to buy a VLGC, while time charter rates are in the vicinity of $800,000/month. So at present no [plans], but in future, we'd like to set up a floating storage there," said a source at Japan's Marubeni Corp.
"When we consider the economics, it's difficult at this stage," said another source at Marubeni.
Meanwhile, a Vinabenny spokesperson said Thursday that it had no such plans.
VinaBenny Energy Joint Stock Company, formed in 2008, is a joint venture between PetroVietnam Southern Gas Joint Stock Company, or PV Gas South, a subsidiary of PV Gas, Japan's Marubeni and local company Vietlong.
"[VinaBenny] was planning to bring the boat and put it up right next to the one that PV Gas has at Vung Tau, but from what I have heard, although they are sister companies, they pretty much do business separately, and PV Gas wasn't happy about the whole thing," said a pressurized LPG trader.
"I don't see the market for two floaters; one is enough. So I don't know why [VinaBenny] wants to do it. In any case, they went to the market last month, and found that the charter rate was around $800,000/month. So they've stopped the plan to hire VLGC," said a source at PV Gas.
"I don't think there's enough business for two floaters. But that's exactly what we heard too, that they were planning to bring another boat there," said a Western VLGC broker.
PV Gas, the gas unit of state-owned PetroVietnam, currently operates a VLGC as a floating storage at Vung Tau, 78 miles south of Saigon, and the capital of Ba Ria-Vung Tau province.
Meanwhile, VinaBenny is currently setting up a $245 million LPG receiving terminal and storage facility in Long An province, about 25 km from Ho Chi Minh City.
The Long An terminal, which is slated to begin operations in the second quarter of 2013, will have a storage capacity of 84,000 mt of LPG, including two refrigerated propane and butane tanks each of 34,000 mt, and eight pressurized LPG tanks of 2,000 mt each. The berths at the receiving terminal will also be able to handle VLGCs, or vessels with the capacity to discharge up to 50,000 mt of product.
The Vietnamese LPG market saw sales of around 1.2 million mt for 2010. Nearly 46% of the country's demand is met by domestic supplies from Binh Son, a wholly owned subsidiary of state-owned oil and gas group PetroVietnam, and the operator of the country's sole 130,000 b/d refinery at Dung Quat in Quang Ngai province; and by Dinh Co Gas Processing Plant, which is operated by PV Gas South.
