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T W I C E M O N T H L Y NEWS, PRICES AND ANALYSIS VOLUME XXI, ISSUE 16, 18 AUGUST 2015
LPG World
© Argus Media Ltd www.argusmedia.com
Editorial: Safety alert 2
News/inventories
Pemex sells NGL assets 3
YPF downplays shale prospects 3
Braskem boosts output 3
US ethylene prices slip 4
Japanese inventories rise 4
Enlarged Clarksons benefits from LPG 5
Riyadh taps bond market 5
Cyprus government favours autogas 6
US west coast exports competitive 6
Low Rhine water troubles distributors 7
Russian exchanges offer clear sales outlet 8
Indian demand stays strong 8
Fitch forecasts lower US NGL price 9
Tianjin blast disrupts LPG vessels 9
Majors keep the faith with US shale 10
Data
Shipping/Transport 11
Market review — Europe 12
Market review — Asia 13
Market review — Americas 14
Prices 16
Inside
A further bout of labour unrest that had threatened to
again delay the Panama Canal expansion works has
been avoided. Construction is now 90pc complete
A potential strike by workers threatened
to further delay the $5.25bn project to
expand the Panama Canal in Central
America. But the main contractor on thecanal expansion project, the GUPC con-
sortium, averted the strike on 12 August
— the day it was supposed to begin.
GUPC, which is led by Spanish con-
struction company Sacyr, made “another
economic sacrifice to avoid a strike that
would have again affected the timing of
delivery of the project”, it says — despite
honouring a previous wage increase
under a 2014 labour deal with workers
union Suntracs.
The canal expansion project has
already suffered bouts of labour unrest
— construction was originally scheduled
for completion this year.
But the entire project is now 90pc
complete and should be finished in the
first half of next year, the Panama Canal
Authority (ACP) says. New locks have
been filled and tests are under way on
new gates and other installations (LPGW,
21 January 2014, p7).
The expanded canal will allow thetransit of larger vessels, including very
large gas carriers (VLGCs) from US Gulf
coast LPG export terminals. The route
will effectively cut VLGC sailing times
from the Gulf to east Asia to 25 days,
compared with 45 days for the route
around the Cape of Good Hope.
Suntracs represents workers for the
GUPC consortium, which comprises
Italy’s Impregilo, Belgian firm Jan De
Nul and local company Cusa, alongside
project leader Sacyr.
Troubled waters
Suntracs wanted an 8.9pc pay increase
for its members, retroactive to 1 July. The
demand represented a different interpre-
tation of a May 2014 accord under which
GUPC and the union agreed to a one-
time 11pc salary hike, the consortium
says (LPGW, 18 February 2014, p9).
The ACP initially rejected GUPC’s
request to find an “economic solution”,the contractor says.
Separately, the ACP was forced
on 10 August to issue “temporary and
preventive” draught restrictions for the
Panama Canal because of unusual
weather conditions. A lack of rain has led
to a drought in the canal watershed. The
maximum tropical fresh water draught
has temporarily been set at 11.89m,
effective from 8 September.
Panama Canal averts strike threat
US NGL price weakness ‘could linger for a protracted period’ — Fitch Ratings (see p8)
Jan Apr Jul Oct200
400
600
800
1,000
1,200201320142015
Propane cif ARA $/t
Jan Apr Jul Oct200
400
600
800
1,000
1,200
201320142015
Propane Saudi CP $/t
Balboa
PanamaCity
Vacamonte
Cocoli
Gamboa
Coco Solo bay
P A N A MA
Manzanillo
Cristobal
Bahia Las Minas
Taboguilla island
Melones island
toUS Gulf
Gatunlake
Main ship route
Port
Panama Canal
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18 August 2015Argus LPG World
Safety will always be a key concern for
the LPG industry, given the hazardous
and explosive nature of the fuel. Onewrong move can result in fatalities.
The LPG industry has dealt sensibly
with this issue over the years, recognis-
ing that for the public, the handling of any
gas demands respect and discipline. But
accidents can still occur.
The World LPG Association in 2009
commissioned US public-relations firm
Fleishman-Hilliard to investigate what
the public thought about LPG. Safety
was the prime concern in a world where
stakeholders are “empowered to shareopinions more than ever before”, senior
vice-president Marjorie Benzkofer said
(LPGW, 21 October 2009, p8).
The fatal and devastating blast in
Tianjin, China, on 12 August was not
caused by LPG ( see p9) — but it hap-
pened in a region where major stor-
age and terminal infrastructure is sited.
This includes China’s first large propane
dehydrogenation (PDH) plant, operated
by state-owned chemicals group Tianjin
Bohai, which came on line in October
2013 (LPGW, 15 October 2013, p5).
Industrial safety is a growing public
issue in China, following a series of
high-profile incidents in the oil and gassectors, heightening concerns about the
concentration of energy infrastructure in
heavily populated areas. But Beijing’s
push for improved safety and the reloca-
tion of some facilities requires massive
investment, at a time when Chinese oil
companies are scaling back spending
in response to slowing demand growth.
The governing state council issuedwarnings to top oil executives and laid
criminal charges against 14 others in
2011 after a series of fires and explo-
sions at oil facilities in Dalian, mostly
operated by state-controlled PetroChina.
A fatal explosion destroyed one of
state-controlled oil company Sinopec’s
key crude pipelines in east China’s
Shandong province in November 2013.
This added to growing pressure from a
public already forced to deal with China’s
worsening air pollution caused by the
country’s rapid industrialisation.
Somewhere in this picture LPG fits
in — and China so far has been rela-
tively free of high-profile accidents involv-ing the product. But soaring imports
again this year and PDH plant additions,
expanding Chinese PDH capacity by
2.1mn t/yr this year to 5.6mn t/yr, will
increase the safety risks for LPG.
China has not followed the kind of
tough location permitting requirements
demanded for plants in the US and west-
ern Europe. When big new plants are
built too near to urban areas, then safety
standards must be rigorously maintained.
LPG has dodged the headlines thistime. But one high-profile disaster is all
it would take for the public to shun the
product. Safety is key to LPG growth.
E d i t o r i a l
Argus LPG World ispublished by ArgusMedia Ltd
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Safety alert
Argus Africa LPG 2015
20-21 October, Cape Town, South Africa
Following the success of the inaugural Argus
Africa LPG conference last year, we are
pleased to confirm the 2015 conference
dates on 20-21 October.
For more information, please visit our web-
site: www.argusmedia.com/africa-lpg
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18 August 2015Argus LPG World — In brief
EuropePropane truck fire on UK motorway
Disaster was avoided after an LPG truck
fire on a motorway near Manchester
in the UK forced the road’s closure for
several hours on 10 August. A blaze
broke out on the propane tanker but
was brought under control before the
tanker barrel exploded. The motorway
was closed for a number of hours but
no-one, including the driver of the tanker,
was injured. The tanker was carrying
propane for Netherlands-based SHV’s
UK distribution unit Calor Gas. SHV is
Europe’s largest LPG distributor.
Shale Gas
YPF downplays shale prospects
Argentina’s state-controlled oil firm YPF
is lowering expectations for significant
domestic shale output growth in the near
future. “Do not expect any significant
joint venture to be announced soon,”
YPF says. The company will explore new
shale options when the industry outlookimproves, it says. The Vaca Muerta is
Argentina’s most promising shale forma-
tion, but although a number of interna-
tional companies — including Chevron,
Shell and Total — hold significant acre-
age, most remain at the exploration
phase. YPF’s unconventional production
was 43,300 b/d of oil equivalent in the
second quarter, up by nearly 4pc on the
year (LPGW, 3 March, p6).
Africa
Egypt awards refinery contracts
Egypt is investing to upgrade its ageing
refining sector to meet growing domesticproducts demand. State-owned oil com-
pany EGPC agreed a $1.5bn contract
with French engineering firm Technip
last month to expand the 50,000 b/d
Asyut refinery to maximise diesel produc-
tion. And state-controlled refiner Midor
has signed a $1.4bn deal with Technip
to increase capacity at its Alexandria
refinery by 60,000 b/d to 160,000 b/d
by 2018. A new $2.5bn hydrocracking
complex at Asyut has a capacity of up to
50,000 b/d — producing 20,500 b/d ofdiesel, 2,250 b/d of butane, 10,200 b/d
of gasoline and 13,500 b/d of jet fuel, the
petroleum ministry says. Egypt’s eight
oil refineries have 706,000 b/d of crude
processing capacity and a utilisation rate
of around 70pc.
New NNPC director fires executives
Nigerian state-owned oil company
NNPC’s new group managing director,
Emmanuel Ibe Kachikwu, has dismissed
all eight of the company’s executive
directors. He wants to reform NNPC
to make it more commercially efficient.
Kachikwu replaces Joseph Thlama
Dawha, who was appointed by formerNigerian president Goodluck Jonathan
last year. Kachikwu is expected to reduce
the number of divisions within the firm.
Petrochemicals
Braskem boosts petrochemicals output
Brazilian petrochemicals group Braskem
produced 1.097mn t of polyolefins in the
second quarter of this year, up by 15pc
from the same period in 2014 and 10pchigher than in the previous quarter.
French LPG demand fell in May.
Consumption of 99,000t was down by
10pc compared with 110,000t in the
same month a year earlier, accordingto the country’s energy ministry.
But France’s LPG demand in the
first five months of this year — includ-
ing packed, bulk and autogas com-
bined — increased to 861,000t, a rise
of more than 5pc from consumption of
819,000t in the January-May period a
year earlier.
Demand eases in France
Spanish LPG consumption declined in
June, despite lower state-set prices.
Demand of 91,800t was down by
14pc compared with June last year,although packed LPG consumption
rose by almost 1pc to 54,800t, market
regulator the CNMC says.
Bulk deliveries fell by 30pc on the
year to about 37,000t in June. Spanish
LPG demand in the first half of this
year was down by 2.1pc compared
with January-June 2014 at 856,000t.
Spain demand resumes fall
Mexican state-owned oil firm Pemex
has agreed to sell its 50pc interest in a
package of domestic midstream natu-
ral gas and natural gas liquids assets.US utility Sempra Energy’s Mexican
subsidiary IEnova will pay $1.325bn
and take on $170mn of debt.
The Gasoductos de Chihuahua
assets include the 30,000 b/d TDF
LPG pipeline and the Guadalajara LPG
storage terminal on Mexico’s Pacific
coast, the 272mn ft³/d (2.8bn m³/yr)
Samalayuca natural gas pipeline, the
1bn ft³/d San Fernando line, the 2.1bn
ft³/d Los Ramones 1 pipeline and a
152mn ft³/d ethane pipeline.
The deal should close in the fourth
quarter, transferring 100pc ownership
of the assets to IEnova. The deal is “a
result of Pemex’s decision to monetise
assets”, the companies say.
Pemex sells NGL assets
Jan 15 F eb Mar Apr May Jun0
50
100
150
200
250
Packed Bulk Total
Spanish LPG consumption ’000t
Jan 15 Feb Mar Apr May0
50
100
150
200
250
French LPG demand ’000t
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18 August 2015Argus LPG World — In brief
US propane inventories rose by a larger-
than-expected 2.41mn bl to 92.79mn bl
in the week to 7 August, government
agency the EIA says. Propane stocks
are more than 50pc higher than the
five-year average and 22.4mn bl higher
than inventories at the same time last
year. The US Gulf coast accounted for
the majority of the stockbuild, climbing
by 2.45mn bl to just over 59mn bl. The
larger build was driven by a slowdown
in exports, coupled with increased
flows of domestic production to the
hub at Mont Belvieu, Texas.
US stocks climb again
US propane inventories mn bl
Region 7 Aug 31 Jul 8 Aug 14
East coast 4.270 4.424 5.382
Midcontinent 26.079 26.123 23.433
US Gulf coast 59.035 56.578 38.718
Rocky Mts,west coast
3.407 3.253 2.767
Propylene* 4.680 4.798 4.135
Total 92.791 90.378 70.300
*included in US Gulf coast total — EIA
US upstream independent Occidental
Petroleum’s (Oxy) new 2.9mn t/yr LPG
export facility near Corpus Christi,
Texas, may not start up until September.Shipbrokers and traders had
expected propane exports from the
terminal from as early as this month,
but this now looks unlikely because of
pipeline delays.
US midstream operator NuStar
began filling its 110,000 b/d propane
pipeline from storage terminals in Mont
Belvieu, Texas, to Corpus Christi in
May, but it suspended the service
when pipeline corrosion was discov-
ered (LPGW, 4 August, p6).
Pipeline operations should resume
in the fourth quarter, NuStar says. Oxy
declines to provide an updated time-
line for the export project. The firm is
an anchor shipper on the pipeline.
Oxy terminal delayed
US government agency the EIA has
revised down slightly its ethane pro-
duction forecast for this year. Lower
commodity prices have curbed drilling
in many wet gas regions, it says.
The EIA’s latest monthly Short-
Term Energy Outlook revised US
ethane production to 1.14mn b/d in
2015 compared with 1.16mn b/d in
July’s forecast, although propane and
butane output predictions for this year
are unchanged at 1.11mn b/d and
600,000 b/d, respectively.
Producers continue to leaveethane in the natural gas stream in
many areas (LPGW, 15 July, p3). Spot
ethane at Mont Belvieu, Texas, aver-
aged 18.65¢/USG in July, compared
with 19.38¢/USG at the end of last year.
The US will consume around
2.57mn b/d of natural gas liquids next
year, as new petrochemicals plants
increase demand for ethylene and pro-
pylene feedstock. The EIA forecasts
ethane demand of 1.16mn b/d and
1.17mn b/d of propane in 2016.
EIA lowers ethane forecast
Japanese LPG stocks were almost 2pc
higher than a month earlier at 1.9mn t
in June, pushed up by rising imports.
Propane stocks increased by 1.3pc
to 1.1mn t, while butane stocks rose
by 2.8pc to 733,000t, Japan’s LP Gas
Association says. Total Japanese LPG
imports of 806,000t in June were up by
2.9pc from May, as a more than 59pc
surge in butane imports to 188,000t
outstripped a 7pc drop in propane
deliveries to 618,000t. Refinery LPG
sales dropped by 4.4pc compared
with May to 152,000t.
Japanese inventories rise
US firm DCP Midstream is loading
butane exports at its 7,000-8,000 b/d
Chesapeake, Virginia, terminal.
DCP converted the facility to ena-ble butane exports earlier this year — it
was previously a propane import ter-
minal — and the firm is exporting 2-3
cargoes a month (LPGW, 2 December,
p3). The facility could increase exports,
but DCP does not say when.
The company’s Sand Hills natural
gas liquids pipeline, serving Texas’
Permian basin and Eagle Ford shale,
came back on line at the end of
the second quarter following a 25pc
capacity expansion to 250,000 b/d.
DCP is installing additional pump sta-
tions to the Sand Hills pipeline, which
will add about 30,000 b/d of extra
capacity when they come on line in the
middle of next year.
DCP exports US butane
Spot US ethylene prices at Mont
Belvieu, Texas, sank to 25¢/lb for
August delivery on 12 August — their
lowest point in nearly six years.The price fall comes as booming
production has added to a well-sup-
plied market. US chemicals output in
the second quarter reached its high-
est since the fourth quarter of 2004,
pushing ethylene inventories to 923mn
lb, or about six days of supply, indus-
try association American Fuel and
Petrochemical Manufacturers says.
Production continued to increase in
July, as midstream operator Williams’
cracker in Geismar, Louisiana, began
operating at its expanded capacity of
1.95bn lb/yr and Netherlands-based
LyondellBasell’s 250mn lb/yr expan-
sion in Channelview, Texas, came on
line (LPGW, 6 May, p1).
US ethylene prices slip
Japan’s LPG statistics ’000t
Jun 15 May 15 Jun 14
Production 152 159 201
Imports 806 783 917
Consumption 923 865 1,067
Total stocks 1,864 1,829 1,833
Consumable 376 347 345
Mandated 1,488 1,482 1,488
— JLPGA
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18 August 2015Argus LPG World — In brief
Algerian state-owned oil company
Sonatrach may proceed with the
upgrade of its 58,000 b/d Algiers refin-
ery with the help of subcontractors,
energy minister Salah Khebri says.
Sonatrach terminated in June a
$900mn contract with French engi-
neering company Technip, signed in
2010, to boost capacity to 78,000 b/d
and enable production of EU specifi-
cation gasoline.
Technip confirms i ts involvement in
the project has ended and that it has
begun arbitration proceedings overwhat Khebri calls a “commercial” dis-
pute. The minister has ruled out a new
tender for the upgrade.
Sonatrach recently changed its
top management, appointing Amine
Maazouzi as chief executive to replace
interim head Said Sahnoun. Maazouzi,
aged 50, is a relatively young appoint-
ment. But he has a strong background
in reservoir engineering, having led
a management team at the Hassi
Messaoud oil field.
Sonatrach salvages project
Japan’s sales of pipeline city gas fell
by 2pc from a year earlier to 2.7bn
m³ in June, as consumption in the
household, commercial and industrialsectors declined.
The June figures include some
demand from May, depending on when
monthly gas meter checks took place,
the Japan Gas Association says.
Consumption in the Japanese
household sector declined by 4.8pc
from a year earlier to 518.2mn m³ in
June, after higher temperatures cut
demand for heating. Sales to com-
mercial consumers fell by 2.5pc to
312.2mn m³ compared with June last
year, while industrial demand was
down by 1.2pc to 1.7bn m³.
Japan’s pipeline city-gas supplies
comprise 90pc methane, 5pc LPG and
5pc ethane (LPGW, 4 August, p5).
Japan city-gas sales drop
UK-based shipping services company
Clarksons’ profit fell to £6.2mn ($9.7mn)
in the first half of this year from £9.8mn
a year earlier.But excluding exceptional costs,
including the acquisition of Norwegian
shipbroker RS Platou, profits rose to
£17.2mn from £11.5mn a year earlier,
boosted by a stronger tanker broking
market. The results marked a “solid
start” to the year, Clarksons says. Profits
will be weighted towards the second half
of this year, it says.
“The multi-cyclical and volatile
nature of our markets was demonstrated
by the sudden shift in oil markets and
other commodity prices,” the firm says.
“Across our broking business, this back-
drop has contributed to a strong per-
formance in some markets, particularly
tankers, specialised products and gas.”
The crude and products tanker brok-
ing markets have benefited as freight
rates and returns to shipowners have
soared. LPG tanker spot rates havebeen high and the very large gas carrier
(VLGC) market strengthened despite a
lack of liquidity ( see p11).
The prospect of new capacity
remains an important issue for the VLGC
market with 47 new vessels expected
in 2016. The market’s ability to absorb
these VLGCs will depend on exports
from the US to Asia-Pacific, where
demand in some counties is growing
sharply, Clarksons says. But uncertainty
caused by lower oil prices and the open-
ing of new Panama Canal locks is tem-
pering expectations ( see p1).
Clarksons’ profits were dented by
the dry bulk market, where freight rates
fell to their lowest since 1985.
Enlarged Clarksons benefits from LPG shipping activity
Saudi Arabia is taking on more debt
as lower crude prices strain govern-
ment finances. The finance ministry has
issued bonds worth 20bn riyals ($5.3bn)
with maturities in a range of 5-10 years.
The country plans to issue more
debt in the coming months, but the
finance ministry has given no details on
how much it expects to raise, saying
only that it will be “in accordance with
finance requirements”.
The latest bonds are open to com-
mercial banks, unlike Riyadh’s foray into
the debt market earlier this year. Saudi Arabia issued SR15bn of bonds in June
— its first sovereign debt issue since
2007 — but they were available only to
quasi-government institutions.
Saudi Arabia is resorting to borrow-
ing to bridge its budget deficit, which
has widened this year as a result of
lower revenues from oil exports. And
Riyadh is drawing down its foreign cur-
rency reserves, which were $668bn at
the end of June, down from $732bn at
the end of last year.
The Saudi budget is based on a
North Sea Brent crude price of $60/bl
and domestic oil production of 9.6mn
b/d. Output was 10.2mn b/d in January-
July, according to Argus estimates. But
Brent averaged below $60/bl in that
seven-month period.
Official figures published early
this year indicate that the government
expects a budget deficit of SR145bn
this year. And government spending
usually exceeds the budget by around
25pc/yr, but Riyadh will probably rein in
overspending this year because of loweroil prices (LPGW, 6 January, p3).
Riyadh-based bank Jadwa
Investment is more pessimistic. It pro-
jects a Saudi budget deficit of SR398bn
this year, compared with SR66bn in
2014. The bank forecasts Saudi Arabia’s
oil export revenues — which account
for around 90pc of total revenues — at
$171.8bn this year, down from $285bn
last year. Jadwa’s prediction is based on
a $61/bl Brent crude price and Saudi oil
production of around 9.8mn b/d.
Riyadh taps bond market
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Mediterranean/US
The small LPG market in Cyprus is about to grow, following a
government decision in favour of autogas. But infrastructure
investment is needed for the autogas market to flourish.The island nation in the eastern Mediterranean consumed
around 50,000t of LPG last year, but the Cypriot energy minis-
try’s decision to grant tax advantages to LPG as a motor fuel
should contribute to strengthening demand in the medium
term ( see table). The government in Nicosia has set the tax
rate for autogas at just €0.07/litre ($2.94/USG), compared with
€0.48/l for gasoline and €0.45/l for diesel. This lower excise tax
on autogas will remain in place until 2023.
Trust the networks
The country’s two major LPG importers — local firm Intergaz
and Greek refiner Hellenic Petroleum — are negotiating withthe operators of Cyprus’ fuel retail network to install autogas
pumps at their filling stations. “We considered opening our
own network of LPG stations. But in the course of negotiations,
it became clear that it was preferable to trust retail to the exist-
ing networks,” an executive from one of the importers says.
The owners of the largest filling station networks in Cyprus
are local downstream firm Petrolina, with 100 outlets under
the brand of Petrolina and Agip, Eko, which has 87 outlets,
ExxonMobil with 62, Russian private-sector oil firm Lukoil with
30 and local company Staroil, with seven. Lukoil plans to install
autogas pumps at two fuel stations in the capital, Nicosia.
A regulatory process to license companies to install LPG
equipment on Cyprus has been initiated and the first LPG con-
version centres should be operational by the end of this year,
according to the energy ministry.
Sales of autogas in Cyprus next year could quickly reach
up to 10,000t, some local LPG market participants say. But
some traders are sceptical about the growth prospects for
autogas in the country. “The rapid flowering of the autogas
market in Cyprus is hardly worth the wait,” one local trader
says. “We have to start from nothing. Nobody will ask to install
LPG-equipment on new cars or for the conversion of old vehi-
cles, because there is no reason,” he says.
The household cooking and heating sector accounts for
more than 80pc of total LPG consumption in Cyprus with lim-
ited demand coming from the light industrial and agricultural
sectors. Demand peaks in the winter. The largest cylinder
distributors are local firms Petrolinagas, Intergaz, Petrogaz,
Eurogas, Centragaz, Eurogas and Lina Gas.
Modest storage
LPG storage capacity in Cyprus totals only 2,400t, according
to local traders. The largest storage facility, in Larnaca on the
southeastern coast, is owned by Intergaz and has a capacity
of 2,000m³. Petrolina has a 1,000m³ storage facility, also in
Larnaca. The country has no LPG production.
Most of Cyprus’ imports come from Greece and the
Black Sea. Black Sea receipts in the first half of this year were
unchanged compared with the same period a year earlier
( see table). Local trading companies import cargoes from the
Black Sea and the Mediterranean through the port of Larnaca.
Intergaz subsidiary Jomaro imports LPG on its 2,000t LPG
coasters, the Seagas Governor and the Seagas General.
Cyprus government favours autogas
Cyprus imports from Black Sea ports, 1H15 ’000t
Loading port Vessel Date Amount
Illichivsk Seagas General 11 Jan 2.0
Illichivsk Seagas Governor 1 Feb 2.0
Illichivsk Seagas Governor 16 Feb 2.0
Illichivsk Seagas General 26 Feb 1.6
— Argus
Cyprus consumption, 1H15 ’000t
1H15 1H14 ±%
Domestic Sales 29,747 25,373 17.2
of which:
Government 183 170 7.6
Military bases* 851 616 38.1
Other 28,713 24,587 16.8
Strategic reserves 1,813 2,323 -22.0
*UK and UN bases — Energy ministry
Propane exports from the US west coast
will retain a competitive freight advantage
even after the Panama Canal expan-
sion, operator of a planned Pacific coast
terminal Canadian midstream company
Pembina Pipeline says.
The firm wants to build a 37mn
b/d propane export terminal at Portland,
Oregon, and its plans are being reviewed
by the city council (LPGW, 19 May, p1).
Once the canal expansion is complete,
US Gulf coast exports will become more
competitive in Asia-Pacific ( see p1).
But Pembina chief executive Mick
Dilger says: “It is uncertain how much
propane will pass through the Panama
Canal. Just because the canal is
expanded, it does not mean Gulf coast
propane will rush through. It may still go
to South America.”
Pembina sold 104,000 b/d of natural
gas liquids in the second quarter, down
from 105,000 b/d last year. But rev-
enue from conventional liquids pipelines
increased by 25pc on the year to $152mn
in April-June. Natural gas services reve-
nue rose by 25pc to $49mn in the period.
US west coast exports competitive, says Pembina
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LPG distributors have been struggling to deliver supply from the
Amsterdam-Rotterdam-Antwerp (ARA) market to inland north-
west European markets as a result of unusually low water levels
on the river Rhine.
The reduction in barge supply has led to an increase in the
use of LPG trucks to shift supply inland from the ARA region.
Inland regional LPG demand, principally from Germany,
depends on Rhine barge traffic, which is the main supply route
from the ARA region. Germany’s cooking and heating LPG
market consumes around 511,000 t/yr.
Optimum conditions
The smooth flow of barge traffic on the Rhine depends on
a relatively narrow set of operating conditions. Traffic can
be stopped by ice or high water levels in the winter, which
impedes transit through bridges. Conversely, a summer
drought will cause water levels to drop too low to sustain nor-
mal, fully laden barge traffic flows.
Rhine river levels in the first two weeks of August were under
1m at key measuring point Kaub. To reach destinations in the
south, barges must pass a shallow part of the Rhine between
Sankt Goar and Mainz — a section that includes Kaub.
The maximum mean draught of a barge can be 2.7m at
Kaub at current water levels, but larger vessels need a draught
of 3.2-3.4m to load to capacity. Water levels are affecting load-
ing capacity particularly on the lower Rhine for destinations
such as Duisburg and Cologne ( see map). Bigger barges that
carry middle distillates and gasoline can load only about 60pc
of capacity on this section.
LPG barges on the Rhine are carrying around 500t, half their
normal amount, because of the low water levels, meaning more
barges are needed to transport the same amount of product. At
the same time, demand was briefly higher than normal because
of LPG supply shortages following the shutdown of a steam
cracker at Shell’s 140,000 b/d Wesseling refinery in Germany,
and a fire at Miro’s 301,000 b/d Karlsruhe refinery in Germany.
Miro aimed to return to full production by 17 August.
One distributor with a contract to load at a German refinery
faced the prospect of flaring rather than shipping LPG because
of barge problems, but it loaded the product onto trucks
instead. And a German trader booked 25 trucks to replace a
500t barge that was meant to transport product to storage.
Vessel shortage
Meanwhile, petrochemicals sector buyers and one trader
have block booked LPG barges, adding to a shortage of ves-
sels. Freight rates for gasoil and gasoline continue to rise,
with Rhine gasoil barge freight rates from ARA to Duisburg at
around €11.65/t ($12.94/t) in the first week of August, and at
€30.65/t to Karlsruhe. LPG barge rates are between $15/t and
$30/t, rising the further downstream the destination.
There is no shortfall of railcars because of the barge short-
age, German rail operators say. And, so far, they have no plans
to raise rail freight rates.
Low Rhine water troubles distributors
ARA
FRANCE
SWITZERLAND
GERMANY
NL
LUXEMBOURG
BELGIUM
AUSTRIA
NETHERLANDS
Amsterdam
AntwerpDuisburg
Dusseldorf Cologne
Bonn
Bingen Mainz
MannheimHeidelberg
Strasbourg
Basel Zurich
AndermattChur
Rhine
Rotterdam
Kaub
Inland Rhine LPG market
Low water levels on the river Rhine are hindering LPG barge traffic from the Amsterdam-
Rotterdam-Antwerp trading hub to the inland markets of western Europe. This has ledto a scramble to find available railcars and trucks as an alternative transport option
• Chemgas was formed in the 1960s to transport LPG on
Europe’s inland waterways. Rotterdam-based Chemgas has
a fleet of 23 gas tankers. The firm will continue investing in itsfleet, to match the needs of its customers, as well as in new
technologies and staff training, it says.
• Gefo Gas is a division of Hamburg-based shipping group
Gefo. The company owns 15 LPG barges that feature a three-
hull design. It has no plans to expand the fleet at present.
• Lehnkering Reederei is a subsidiary of Germany’s
Imperial Shipping. The Duisberg-based company’s gas
tank division consists of a fleet of 16 LPG barges, two of
which were introduced in late-2011 with a further two starting
operations in 2013.
Key ARA barge owners
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Sales of LPG through three Russian commodities exchanges
— Saint-Petersburg, St Petersburg International Mercantile
Exchange (Spimex) and Moscow Energy Exchange (MEE) —fell in the first seven months of this year.
LPG exchange transactions in January-July reached only
110,100t, down by 96,900t compared with the same period
in 2014. The strong cut-back reflected lower LPG sales by
Russian private-sector oil company Surgutneftegaz, which
slashed exchange sales by 102,900t to 93,600t.
But the number of deals is growing gradually on the
MEE platform. MEE started trading oil products, LPG and
ShFlu — broad fraction of light hydrocarbons — in December
last year. Market participants that had previously traded on
Moscow’s international commodity and energy exchange
MMTB moved to MME after the suspension of trading on theMoscow International Mercantile Exchange in January last
year. MMTB had a near-monopoly 99pc share of LPG and
ShFlu trades in Russia in 2013.
Sibur debut
MME sold 7,800t of LPG from Russia’s largest LPG producer
Sibur and 300t of propane from Surgutneftegaz in January-
July. Surgutneftegaz started trading on the MME platform
in December last year, followed by Sibur in May. Sibur sold
3,000t of LPG through MME last month compared with 3,100t
in June and 1,600t in May.
Spimex conducted 8,400t of trade in the first seven
months, compared with 10,500t in the same period last year,
reflecting weakening interest in trading LPG on the exchange.
Overall sales of feedstock for gas processing — ShFlu and
fraction of light hydrocarbons (Flu) — jumped by 164,300t to
254,900t in January-July amid strong demand from Russianstate-controlled oil companies Bashneft and Rosneft.
Under the Russian law governing the contract system
for procurement of goods, works and services for state and
municipal needs, companies in which the state holds a large
share must make purchases through the country’s electronic
portal of public procurement or on Russian stock exchanges.
Fluopoly
Rosneft started using the stock exchange in the spring to
purchase contracted feedstock supply for its petrochemicals
affiliate Sanors — Rosneft completed the acquisition of Sanors
in March. And Bashneft bought ShFlu and Flu for its subsidiaryUnited Petrochemical.
The biggest volume of ShFlu was sold on Spimex in
January-July, which traded 125,900t compared with 90,100t in
the same period last year. Strong demand led to higher ShFlu
prices, which more than doubled over the period. The price
had climbed to 15,045 roubles/t ($230.15/t) fca Surgut by the
end of July from Rbs6,549/t in January.
The second major exchange for the sale of ShFlu was MEE,
with 81,200t traded on the platform in January-July. Sales of
ShFlu through Spimex reached only 5,100t. But Spimex began
selling Flu — different from ShFlu because of its higher pen-
tanes content. Flu is traded only on Spimex, with sales on the
platform in the January-July period of 47,300t. Bashneft bought
43,800t while Rosneft took 3,500t.
Russian exchanges offer clear sales outlet
Trading/India
India’s LPG consumption rose by 10.4pc
in July from the same month a year
earlier — the 22nd consecutive monthly
demand increase year on year, the latest
oil ministry data show.
Demand rose to 1.58mn t lastmonth from 1.43mn t a year earlier.
Consumption was higher by 6pc from
1.49mn t in June — but not as high as
peak demand of the year so far of over
1.6mn t, reached in March.
LPG use in India continues to rise
year on year as the government steadily
streamlines the public distribution sys-
tem for supplying subsidised cylinders
to households. This has led to faster
refills and is attracting new users (LPGW,
4 August, p2).
Consumption in India’s 2014-15 fis-
cal year, which ended on 31 March,
increased by 10.4pc to 18mn t from
16.3mn t a year earlier. Demand for the
first seven months of the calendar year
has reached 10.7mn t/yr.The government cut prices of non-
subsidised LPG by 3.9pc in July, bring-
ing the cost of the cooking fuel closer to
subsidised rates. Subsidised prices for
a 14.2kg cylinder were reduced by 23.5
rupees (37¢) or 3.9pc to Rs585 from 1
August, the second reduction in the past
two months (LPGW, 1 July, p9).
Market prices are now around 40pc
above subsidised prices of Rs417.82
in Delhi, according to Indian state-con-
trolled refiner IOC. This is the narrowest
gap between the prices in more than a
year — crude prices have roughly halved
since June 2014 and fell more quickly,
and further than LPG prices.
India typically meets more than half
of its LPG demand through imports.
June deliveries of 651,000t lifted total
imports in the first half of this year to
around 4.3mn t.
Indian demand stays strong
Jan 15 Feb Mar Apr May Jun Jul1.4
1.5
1.6
1.7
Indian LPG demand mn t
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Cheap US shale gas will continue to drive natural gas liquids
(NGL) production, credit ratings agency Fitch says. And prices
will remain low and rangebound in the long term, despite risingdemand from the US petrochemicals sector and for exports.
“US shale producers continue to improve unit economics
and migrate down the cost curve, which allows them to oper-
ate at lower breakeven prices and tolerate lower NGL prices,”
Fitch analysts Mark Sadeghian and Peter Molica say in the
company’s latest NGLs briefing.
Lingering weakness
Fitch is concerned that NGL price weakness “could linger for
a protracted period or prices could exhibit further downside in
the midstream space, particularly if there is significant macro-
economic weakness”.Spot propane at Mont Belvieu, Texas, averaged 37¢/USG
in the first half of August, down from 101¢/USG in the same
period a year earlier. Ethane prices reached 20¢/USG in the
same period, down from 23¢/USG in the first half of August
last year. Prices have fallen along with crude price declines.
Fitch notes that new investments in ethylene crackers and
the expansion of export terminals should help support NGL
demand. Although midstream companies could suffer from
protracted weakness, it says. “Gas processors with contract
profiles heavily weighted towards a percentage of proceeds,or a percentage of liquids, or keep-whole type contracts are all
being significantly affected in the lower price environment and
have been underperforming,” Finch says. It forecasts that rat-
ings pressure on these gas processors could increase if NGL
prices remain low.
Fixed-fee processors should remain far more stable
across their operations, although “volume exposure is a rising
concern, particularly if production declines,” Fitch says.
Fitch forecasts lower US NGL price
US/Europe/China
Austrian petrochemicals group Borealis will shut its steam
cracker at Stenungsund in Sweden for maintenance in early
September for 4-6 weeks.
The Stenungsund complex hosts a 620,000 t/yr ethylene
cracker, which has the flexibility to use ethane, naphtha, pro-
pane or butane as feedstock and is integrated into Borealis’
downstream polymers plant at the same site. The plant
features a 361,000 t/yr low-density polyethylene unit and a
335,000 t/yr high-density/linear-low density swing unit.
Borealis is investing €160mn ($177mn) to upgrade and
revamp its Stenungsund site. The project will involve work on
four of the six cracker furnaces and aims to improve reliabilityand energy efficiency. The two other furnaces will be shut
down permanently. The project will begin in late-2016 and
the upgrade should be completed by 2020.
This latest project is in addition to an existing €120mn
development at Stenungsund that will allow the cracker to
process more US ethane next year. Borealis has made no
public comment on upcoming maintenance at Stenungsund
(LPGW, 5 February 2013, p3).
Stenungsund is home to a 458,000t underground LPG
storage cavern and Borealis is constructing a new storage
tank at its petrochemicals complex in Porvoo, Finland, to
accommodate imports of US ethane.
Stenungsund maintenance looms
LPG and chemicals tankers have been barred from dis-
charging at northeast China’s Tianjin port following a fatal
explosion on 12 August.
The port is home to large-scale oil, metals and coal
import and export infrastructure, including a 120,000t LPG
storage terminal run by state-owned Tianjin Bohua.
Operations face disruption after a series of explosions
tore through a warehouse area ( see p2). The warehouse
where the explosions took place was used by logistics com-
pany Tianjin Ruihai to store dangerous chemical products,
according to Chinese state-run media, including calcium car-
bide, calcium silicon, hydrogenide and toluene diisocyanate.Tianjin port quickly suspended import and export opera-
tions because of the explosion, but these are expected to
return to normal once clear-up operations are completed.
Storage tanks and berths owned by Hong Kong-listed Tianjin
Port Holdings are all operating normally.
Chinese state-controlled oil firm Sinopec, which operates
the 300,000 b/d Tianjin refinery and the Tianjin oil port, says
its operations remain normal. The Tianjin refinery is around
50km away from the centre of the explosion, while the Tianjin
oil port tank clusters are in another zone of the Tianjin Binhai
New Area industrial complex where the blast occurred.
Industrial safety is a growing public issue in China.
Tianjin blast disrupts LPG vessels
Jan 14 Apr Jul Oc t Jan 15 Apr Jul0
50
100
150
200
Propane Mt Belvieu ¢/USG
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US/Middle East
Declining costs and increased well productivity are sustain-
ing the majors’ interest in US shale oil and gas development,
despite lower oil prices and impairments that continue toweigh on profitability in the sector.
ExxonMobil showed its commitment to US shale by adding
to its Permian basin assets in Texas through two acquisitions
this month, including an area adjoining the firm’s existing acre-
age in Martin and Midland counties.
“We expect to drive continued improvements in productiv-
ity and cost as we develop our substantial inventory of wells,”
ExxonMobil subsidiary XTO’s president, Randy Cleveland,
says. “We are encouraged by the horizontal well productivity
and cost reductions we have achieved to date.”
ExxonMobil’s combined Permian, Bakken and Woodford
shale production increased by 20pc on the year in the sec-ond quarter to about 240,000 b/d of oil equivalent (boe/d).
The company’s rig count of 34 in those areas was down by
about 10 compared with the first quarter. But ExxonMobil’s
drilling and completion costs were around 30pc lower than
at their peak last year.
Upbeat and optimistic
The oil price drop has not changed the company’s “meas-
ured” approach to US onshore investment. “When everybody
was adding a lot of rigs, we took a measured pace,” vice-
president of investor relations Jeff Woodbury says. “Likewise,
in the down-cycle, our rig counts have not come down as sig-
nificantly as you see elsewhere in the industry. The economics
of these investments are still robust.”
Chevron is upbeat about its US shale operations too,
after rising Permian production drove a 46,000 boe/d year-on-
year increase in its second-quarter global shale output. And
the company expects the Permian to be a lucrative area for
further growth. “As we put more infrastructure into the area, it
gives us increasing flexibility and profitability,” upstream vice-
president Jay Johnson says.
The proportion of shale oil and gas in Chevron’s resource
base has risen steadily in recent years. The firm’s unconven-
tional portfolio “has increased by about 15pc over the pastfive years”, Johnson says. “But unconventionals have very fast
decline rates and that is something we must balance against
the longer-term projects with their more stable production.”
BP has increased the cost efficiency of its US shale opera-
tions since it began running its onshore assets in the lower
48 states as a separate business at the start of this year. The
firm’s lower-48 production costs were under $9/boe in the
second quarter, down by 6pc from the first quarter.
“Operating costs are trending lower, and at our Woodford
and Haynesville shale assets we have halved the cost of
bringing new wells on stream,” BP chief executive Bob Dudley
says. The company’s lower-48 production was 280,000 boe/din the second quarter, just under half its total US output in the
period. BP aims to become “a high-return onshore operator
in the US”, Dudley says.
Shell has significantly reduced its North American shale
exposure since 2013, selling around 110,000 boe/d of assets
for more than $3bn. The company’s “growth priorities” are
LNG and deep water. And that focus will only intensify when
its planned £47bn ($73bn) acquisition of UK firm BG com-
pletes next year (LPGW, 3 June 2014, p3).
Sell? Not likely!
But US shale will retain a place in Shell’s portfolio. The com-
pany’s Permian basin assets have a breakeven price “at or
below today’s oil price”, chief financial officer Simon Henry
says. “Could we sell it? I am sure we could. Would we sell it?
I am not sure why we would. There is still longer-term poten-
tial, strategic and competitive advantage for Shell having that
capability in the back pocket,” he says.
“We are drilling wells in [Argentina’s] Vaca Muerta shale at
the moment. That would be more difficult if we were not in the
Permian,” Henry says (LPGW, 3 March, p6).
Majors keep the faith with US shale
The strained relationship between
Kuwait’s oil ministry and state-owned oil
firm KPC is at risk of deteriorating as oil
minister Ali Saleh al-Omair renews efforts
to widen his influence over the compa-
ny’s board. But senior KPC officials are
confident that the continuing discord will
have no further impact on project budg-
ets and timetables (LPGW, 4 August, p3).
Al-Omair wants greater ministry con-
trol over senior staff appointments at
KPC and its subsidiaries. His proposal
has received initial support from Kuwait’s
Supreme Petroleum Council.
But KPC’s board is resisting the
move, arguing that the oil ministry lacks
sufficient technical expertise to steer
Kuwait’s primary source of export reve-
nues. KPC officials doubt that al-Omair’s
plan will receive strong support from par-
liament when it reconvenes in October.
The company wants the ministry to have
a supervisory role only, echoing the
changing relationship between Saudi
Arabia’s oil ministry and state-owned
energy firm Saudi Aramco.
The prospect of an escalation in the
feud comes as Kuwait’s economy falters
under the strain of lower oil prices. The
country posted its first budget deficit
since 1999 in the 2014-15 fiscal year that
ended on 31 March. Kuwait produces
around 3.9mn t/yr of LPG.
Kuwait oil sector faces new political dispute
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18 August 2015Argus LPG World —
A Peruvian producer awarded a ten-
der to sell three 300,000 bl cargoes
of natural gasoline or light naphtha,
loading at the port of Pisco in late
August and early September. The load-
ings are 21-23 August, 1-10 Septemberand 11-20 September. The tender was
awarded to three trading firms on 14
August at premiums of between 10¢/
USG and 13¢/USG over US prices.
The Bosporus Strait, at the north-
ern end of the Turkish straits, will close
for seven hours — 05:00-12:00 local
time (02:00-09:00 GMT) — on 19 August
while work continues to build a third sus-
pension bridge. All shipping traffic will besuspended. Ships of more than 200m in
length are typically restricted to daylight
passage for safety reasons, including all
Aframax and Suezmax crude tankers.
Shipping/Transport news
US ethylene plant gross margins ¢/lb of ethylene
15 Jul 22 Jul 29 Jul 5 Aug 12 Aug-20
-10
0
10
20
30
Ethane Propane Butane
Light naphtha Gasoil
— Argus DeWitt
Ethylene plant gross margins (Mont Belvieu, Texas) ¢/lb of ethylene
NGL economics/Shipping
Ethylene plant total variable cash cost*
15 Jul 22 Jul 29 Jul 5 Aug 12 Aug
Ethane 11.98 12.07 12.53 12.47 12.64
Propane 4.11 4.70 3.98 3.80 3.74
Butane 6.25 6.83 5.52 4.65 5.59
Light naphtha 16.29 15.29 13.15 12.70 13.79
Gasoil 37.79 37.85 34.02 32.81 36.83
* at Mont Belvieu, Texas — Argus DeWitt
Ethylene plant gross margins* ( see graph below )
15 Jul 22 Jul 29 Jul 5 Aug 12 Aug
Ethane 20.77 20.68 19.22 18.03 10.99
Propane 28.64 28.05 27.77 26.70 19.88
Butane 26.50 25.92 26.23 25.85 18.03
Light naphtha 16.46 17.46 18.60 17.80 9.83
Gasoil -5.04 -5.10 -2.27 -2.31 -13.20
* at Mont Belvieu, Texas — Argus DeWitt
Shipping rates
Very large gas carrier rates continued
to fall in the first half of August, dip-
ping briefly below $100/t on the route
from the Mideast Gulf to Chiba, Japan.
Owners expect rates to stabilise and
recover as September spot vesseldemand picks up. But there remains a
surplus of vessels in the east of Suez
market while the Atlantic market shows
little sign of demand.
Shipping rates12-month time charter $/calendar month
78,000m³ 2,200,000
59,000m³ nc 2,000,000
35,000m³ nc 1,150,000
5,000m³ pressurised (west) 220,000
3,500m³ pressurised (west) nc 165,0003,500m³ pressurised (east) nc 165,000
Shipping rates
Spot $/t
44,000t Mideast Gulf/Japan 102.00
1,800t Tees/ARA 43.00
1,800t Tees/Lisbon nc 88.00
— Argus/Gibsons
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18 August 2015Argus LPG World —
European butane
• Large cargo spot trading was subdued throughout the
first half of August. Outright large cargo butane prices
edged lower in the first two weeks of the month, shedding
$11.50/t to reach $281.50/t cif Amsterdam-Rotterdam-
Antwerp (ARA) by 14 August.
• Large cargo butane’s ratio to naphtha remained at about
68pc — almost unchanged for the past few weeks.
• Some additional petrochemicals cracking demand is
emerging, supporting prices on delivered butane coasters
to around 75pc against naphtha.
• But fob coaster prices slipped below the cif assessment,
following some selling pressure earlier this month.
• With Shell’s Moerdijk steam cracker in the Netherlands
coming back on line, butane supply was expected to
become tighter. There are some signs of coaster buy-
ing for Moerdijk, but for only small amounts following the
cracker restart, suggesting that more naphtha than butane
is being cracked at the facility.
European propane
• Large cargo propane prices remained mostly stable dur-
ing a particularly quiet period of trading. Just one spot bid
persisted in the second week of August, but did not attractsellers. Prices rallied slightly to $304/t cif Amsterdam-
Rotterdam-Antwerp (ARA) by 14 August.
• The only spot trade heard done was a 12,000t Handy-
sized cargo that loaded at Braefoot Bay and changed
hands privately following a period of demurrage. Price
details for the deal were not revealed.
• Propane coaster prices have largely stabilised, retaining
their significant discount to large cargoes during a barren
spell of trading.
• The ARA trading hub was affected by low water levels in
the river Rhine, which fell below 1m at the Kaub measuring
point ( see p7). Barges could be loaded to only half capac-
ity, requiring twice as many to transport the same amount
of product, increasing costs and barge shortages. Trucks
and railcars were used instead. The propane barge fob
price fell by $5/t to $342/t fob ARA in the first half of August.
Markets
Jan Apr Jul Oct200
300
400
500
600
700
800
900
1,000
2013
2014
2015
Propane fob NWE cargoes small $/t Propane fob NWE cargoes small $/t
Jan Apr Jul Oct200
300
400
500
600
700
800
900
1,000
1,100
2013
20142015
Propane cif Mediterranean cargoes large $/t Propane cif Mediterranean cargoes large $/t
Jan Apr Jul Oct200
400
600
800
1,000
1,200
2013
2014
2015
Butane fob NWE cargoes small $/t Butane fob NWE cargoes small $/t
Jul 14 Oct Jan 15 Apr Jul0.6
0.7
0.8
0.9
1.0
Propane
Butane
Propane and butane ratios to naphtha NWEPropane and butane ratios to naphtha NWE
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18 August 2015Argus LPG World —
Asian butane
• Large cargo cfr butane prices steadied at a $30/t pre-
mium over propane, reflecting ample propane supplies in
the September delivered market.
• A major offered for sale a mixed, butane-rich 44,000t
cargo from Ferndale, on the US Pacific coast, in September.
And the same company offered two mixed 44,000t cargoes
from Dampier, Australia.
• In the pressurised market, Philippines refiner Petron
awarded a tender to buy a 2,500t cargo to a major,for August 18-20 delivery to Bataan or Mabini, at Saudi
Aramco’s August monthly Contract Price (CP) plus $103/t cfr.
• Offers for August-loading cargoes from south China
were maintained at the August CP plus $85-90/t fob, but
regional spot demand was limited.
• Taiwanese importer Formosa Plastics bought a mixed
44,000t cargo from a Japanese importer, for 11-15
September delivery to Mailiao, at the Aramco CP plus $62/t.
Fellow Taiwanese importer CPC bought a mixed 22,000t
cargo for September delivery at the CP plus $60s/t.
Asian propane
• Spot sales from the Middle East remained steady, with
an increasing number of trades concluded on a spot freight
netback to the cfr price — which reflects more closely thecost of buying a fob cargo from the Mideast Gulf and resell-
ing it at spot cfr quotes.
• Kuwait’s state-owned KPC sold a mixed 40,000t cargo
for 22-23 August and 14-23 September loading at a freight
netback to the September Argus Far East Index (AFEI).
• Abu Dhabi’s state-owned Adgas sold a mixed 44,000t
cargo loading 15-17 September, at a freight netback to the
September AFEI.
• Qatari state-owned marketer Tasweeq sold two full car-goes for September loading that will head to India.
• Propane cfr premiums fell to around minus $7/t against
the September AFEI for delivery in the second half of the
month. Cargoes for first-half September delivery were val-
ued around $7/t lower because a number of unsold prompt
cargoes are yet to find outlets.
Markets
Jan Apr Jul Oct300
500
700
900
1,100
2013
2014
2015
Propane Argus Far East Index $/t Propane Argus Far East Index $/t
Jan Apr Jul Oct
400
600
800
1,000
1,200
1,400
2013
2014
2015
Naphtha c+f Japan $/t Naphtha c+f Japan $/t
Jan Apr Jul Oct200
400
600
800
1,000
1,2002013
2014
2015
Butane Argus Far East Index $/t Butane Argus Far East Index $/t
Jan Apr Jul Oct-100
-50
0
50
100
150
200
250
2013
2014
2015
Propane Far East Index differential to NWE $/t Propane Argus Far East Index differential to NWE $/t
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18 August 2015Argus LPG World —
Americas propane
• Spot propane prices at Mont Belvieu, Texas, firmed in the
first two weeks of August. LST rose to 37.500¢/USG by 14
August from 36.687¢/USG at the start of the month, whileEPC propane firmed to 38¢/USG from 36.375¢/USG over
the same two-week period.
• Propane’s value relative to US benchmark crude WTI
firmed. LST rose to 37.17pc of WTI on 14 August from
34.11pc on 3 August, while EPC rose to 37.68pc of WTI
from 33.82pc at the start of this month.
• LST propane moved to a 0.390¢/USG discount to EPC
by 14 August from a 0.625¢/USG premium. This switch
reflected an easing of storage constraints at the terminals
— low rainfall has removed the threat of brine storage pondcontamination (LPGW, 1 July, p4).
• US government agency the EIA reported a larger than
expected 2.4mn bl build in nationwide propane inventories
in the week to 7 August. The US Gulf coast accounted
for the majority of the stockbuild ( see p4). Midcontinent
propane stocks fell by 44,000 bl, which offered some price
support at Conway, Kansas.
Americas butane and ethane
• Ethane prices at Mont Belvieu, Texas, firmed in the first
two weeks of this month, to 20.12¢/USG on 14 August from
18.75¢/USG.
• Ethane’s fuel-value premium relative to natural gas
firmed in the first half of August, reaching a high of 2¢/USG
on 13 August up from 0.63¢/USG. Although it ended the
period at a 1.66¢/USG premium.
• Spot butane prices on the US Gulf coast rose in the first
half of this month, making gains alongside the market for
propane — a competing feedstock.
• Mont Belvieu butane had firmed to 52.50¢/USG by 14
August, up from 50.25¢/USG on 3 August.
• Butane’s value relative to US benchmark crude WTI
firmed to 51.88pc, up from 46.72pc on 3 August.
• Conway, Kansas, butane firmed in the first two weeks of
August, as a refinery shutdown in the region offered sup-
port to prices.
Markets
Jan Apr Jul Oct20
40
60
80
100
120
140
160
180
2013
2014
2015
Propane Mont Belvieu non-LDH ¢/USGPropane Mont Belvieu non-LST ¢/USG
Jan Apr Jul Oct0
50
100
150
200
2013
2014
2015
Propane US Gulf coast export ¢/USGPropane US Gulf coast import $/t
Jan Apr Jul Oct10
20
30
40
50
2013
2014
2015
Ethane Mont Belvieu ¢/USGEthane Mont Belvieu ¢/USG
Jul 14 Oct Jan 15 Apr Jul1
2
3
4
5
6
Propane
Butane
Mont Belvieu propane and butane ratios to ethanePropane and butane ratios to ethane
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18 August 2015Argus LPG World —
INTERNATIONAL LPG
Markets
Jul 14 Oct Jan 15 Apr Jul200
400
600
800
1,000
NWE
Japan
Propane NWE, Japan $/t Propane NWE, Japan $/t
Jul 14 Oct Jan 15 Apr Jul200
300
400
500
600
700
800
900
Saudi Arabia
AlgeriaNorth Sea
Propane export prices Saudi, Algeria, North Sea $/t Propane export prices Saudi, Algeria, North Sea $/t
Naphtha $/t
Jul 14 Aug Sep Oct Nov Dec Jan 15 Feb Mar Apr May Jun JulCargoes cif NWE 935.66 864.60 841.19 711.98 629.93 491.52 397.62 501.68 503.51 525.71 551.30 538.81 472.34
Cargoes c+f Japan 962.25 906.21 870.61 743.18 669.45 526.11 427.07 526.90 527.59 547.86 576.80 566.45 501.73
Ethane ¢/USGJul 14 Aug Sep Oct Nov Dec Jan 15 Feb Mar Apr May Jun Jul
Mont Belvieu 24.78 22.89 23.41 22.54 22.28 17.70 19.52 18.72 18.66 17.18 19.21 18.89 18.63
Chinese domestic prices yuan/t Jul 14 Aug Sep Oct Nov Dec Jan 15 Feb Mar Apr May Jun Jul
East China terminal
Ningbo ex terminal 6,146 5,950 6,045 6,079 5,275 4,393 4,263 4,803 4,602 4,210 4,073 3,848 3,735
Wenzhou ex terminal 6,166 5,975 6,056 6,087 5,255 4,516 4,334 4,860 4,589 4,210 4,073 3,848 3,735
Taicang ex terminal 6,146 5,950 6,060 6,162 5,285 4,402 4,280 4,717 4,628 4,270 4,094 3,890 3,722
Shanghai ex terminal 6,291 6,250 6,279 6,262 5,345 4,611 4,310 4,700 4,716 4,313 4,205 3,928 3,735
Zhangjiagang ex terminal 6,146 5,950 6,060 6,129 5,325 4,405 4,298 4,720 4,655 4,273 4,099 3,863 3,722
Fujian ex terminal 6,477 6,350 6,350 6,197 5,330 4,655 4,470 4,830 4,809 4,355 4,190 3,890 3,814
East China refnery
Shanghai ex refnery 6,045 5 ,787 6,077 5 ,755 4 ,981 3 ,890 3 ,798 4 ,230 4 ,333 4,182 3,897 3,783 3,631
Zhenhai ex refnery 6,383 6 ,223 6,439 6 ,127 5 ,420 4 ,399 4 ,159 4 ,813 4 ,794 4,485 4,273 4,203 3,967
Yangzi ex refnery 5,936 5 ,810 6,202 5 ,769 5 ,010 3 ,900 3 ,869 4 ,508 4 ,425 4,183 4,078 3,840 3,764
Fujian ex refnery 5,779 5 ,785 5,871 5 ,692 5 ,006 4 ,023 3 ,683 4 ,244 4 ,332 4,133 3,970 3,566 3,461
Gaoqiao ex refnery 5,987 5 ,827 6,183 5 ,960 4 ,962 3 ,843 3 ,783 4 ,230 4 ,282 4,143 3,878 3,765 3,621
South China terminal
Zhuhai ex terminal 6,225 6,225 6,225 6,225 5,855 5,130 4,500 4,685 4,378 4,055 4,071 3,729 3,538
Shenzhen ex terminal 6,534 6,308 6,361 6,269 5,675 5,093 4,193 4,862 4,680 4,410 4,350 3,995 3,661
Raoping ex terminal 6,042 5,968 5,996 5,743 5,190 4,491 4,203 4,658 4,500 4,283 3,980 3,415 3,414
Nansha ex terminal 6,285 6,214 6,286 6,224 5,573 4,948 4,540 4,785 4,498 4,247 4,169 3,799 3,656
Shantou ex terminal 6,042 5,968 5,996 5,743 5,190 4,491 4,203 4,658 4,500 4,283 3,980 3,415 3,414
Yangjiang ex terminal 5,940 5,977 5,939 5,634 4,880 4,004 3,968 4,250 4,111 3,960 3,968 3,513 3,359
South China refnery
Maoming ex refnery 5,946 5 ,889 5,853 5 ,661 4 ,884 3 ,841 3 ,802 3 ,922 4 ,056 3,978 4,020 3,540 3,366
Guangzhou ex refnery 5,948 5 ,976 5,886 5 ,680 4 ,895 4 ,021 3 ,915 3 ,925 4 ,154 4,103 3,916 3,480 3,365
Northeast China refnery
Daqing ex refnery 5,693 5 ,440 5,571 5 ,424 4 ,615 3 ,093 2 ,550 3 ,580 4 ,127 4,060 4,560 3,850 3,727
Dalian ex refnery 5,814 5 ,402 5,433 5 ,382 4 ,560 3 ,298 3 ,503 4 ,167 4 ,398 4,388 4,528 3,975 3,564
Northwest China refnery
Urumqi ex refnery 4,600 4 ,600 4,729 4 ,750 4 ,405 2 ,602 1 ,900 2 ,237 2 ,441 2,655 2,885 2,960 3,050
Inland China refnery
Lanzhou ex refnery 5,165 5 ,087 5,282 5 ,222 4 ,363 2 ,759 2 ,135 2 ,125 2 ,125 3,165 3,648 3,623 3,473
Yan-An ex refnery 5,259 5 ,396 5,563 5 ,434 4 ,610 3 ,571 3 ,385 3 ,898 3 ,867 3,673 3,718 3,478 3,350
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18 August 2015Argus LPG World — Prices monthly
PropaneAug 14 Sep Oct Nov Dec Jan 15 Feb Mar Apr May Jun Jul Aug
Middle East $/t
Saudi Arabia 780.00 745.00 735.00 610.00 550.00 425.00 450.00 500.00 460.00 465.00 405.00 395.00 365.00
Kuwait 780.00 745.00 735.00 610.00 550.00 425.00 450.00 500.00 460.00 465.00 405.00 395.00 365.00
Mediterranean $/t
Algeria (Sonatrach) 705.00 655.00 675.00 545.00 440.00 340.00 325.00 405.00 375.00 365.00 310.00 315.00 295.00
Spot prices $/t
Large cargo cif ARA 681.83 702.89 599.63 518.88 380.88 316.79 404.48 423.48 408.03 366.47 356.98 336.24
Large cargo cif Lavera 680.80 696.27 598.78 516.25 379.36 317.76 410.70 426.82 409.15 367.63 353.50 323.30
Large cargo Japan cfr 825.38 830.68 741.57 646.80 479.82 461.83 573.47 539.16 531.67 506.75 492.55 456.89
Large cargo east China cfr 825.38 830.68 741.57 646.80 479.82 461.83 573.47 539.16 531.67 506.75 492.55 456.89
Large cargo south China cfr 825.38 830.68 741.57 646.80 479.82 461.83 573.47 539.16 531.67 506.75 492.55 456.89
Large cargo far east index 825.38 830.68 741.57 646.80 479.82 461.83 573.47 539.16 531.67 506.75 492.55 456.89
Asia spot premiums to CP $/t
Mideast Gulf -11.79 -9.32 -9.67 -34.20 -45.77 -25.57 34.78 7.00 -2.71 -10.85 -2.14 -23.23
South China (pressurised) 105.29 123.73 118.57 127.80 85.00 129.29 163.50 134.86 123.14 120.20 115.19 120.00
East China (refrigerated) 53.67 87.64 36.62 44.70 -45.46 30.98 115.08 49.89 69.48 56.40 89.83 68.84
South China (refrigerated) 53.67 87.64 36.62 44.70 -45.46 30.98 115.08 49.89 69.48 56.40 89.83 68.84
Taiwan 68.43 84.36 83.14 52.60 19.59 44.79 94.25 80.21 68.76 68.50 89.83 81.25
Japan 68.43 84.36 83.14 52.60 19.59 44.79 94.25 80.21 68.76 68.50 89.83 81.25
Mont Belvieu ¢/USG
LST 101.72 106.29 94.01 80.41 55.27 47.77 57.09 54.24 54.78 47.01 38.67 40.94
Non-LST 101.58 106.06 93.53 80.41 54.63 47.72 57.24 54.45 54.58 45.57 36.50 38.73
Europe $/t
Coasters fob NWE 610.65 632.11 548.04 511.08 380.71 313.48 426.65 441.36 365.40 282.16 261.32 270.44
Barges fob NWE 662.30 680.25 589.85 508.60 368.02 333.81 417.50 439.66 409.08 364.63 318.39 367.44
Coasters fob Med 743.05 727.09 638.35 570.80 460.76 403.48 521.50 527.14 469.25 390.90 352.50 362.04
Butane
Aug 14 Sep Oct Nov Dec Jan 15 Feb Mar Apr May Jun Jul AugMiddle East $/t
Saudi Arabia 800.00 785.00 765.00 600.00 570.00 470.00 480.00 460.00 470.00 475.00 440.00 425.00 400.00
Kuwait 800.00 785.00 765.00 600.00 570.00 470.00 480.00 460.00 470.00 475.00 440.00 425.00 400.00
Mediterranean $/t
Algeria (Sonatrach) 770.00 730.00 715.00 535.00 515.00 380.00 340.00 470.00 435.00 420.00 360.00 350.00
Spot prices $/t
Large cargo cif ARA 749.95 729.80 590.63 546.60 430.00 307.00 442.35 447.36 412.13 405.68 391.45 332.74
Large cargo cif Lavera 771.63 734.95 598.17 553.35 438.33 313.43 448.70 453.95 404.73 397.74 348.41 326.98
Large cargo Japan cfr 872.62 866.68 737.33 654.25 525.86 501.62 540.19 537.48 541.71 540.95 526.50 488.43
Large cargo east China cfr 872.62 866.68 737.33 654.25 525.86 501.62 540.19 537.48 541.71 540.95 526.50 488.43
Large cargo south China cfr 872.62 866.68 737.33 654.25 525.86 501.62 540.19 537.48 541.71 540.95 526.50 488.43
Large cargo far east index 872.62 866.68 737.33 654.25 525.86 501.62 540.19 537.48 541.71 540.95 526.50 488.43
Asia spot premiums to CP $/t
Mideast Gulf -11.79 -9.32 -19.38 -24.25 -29.50 -24.67 16.56 8.73 -2.71 -11.85 -2.14 -23.23
India cfr 72.95 80.46 7.17 54.40 -49.14 23.86 57.03 71.84 64.71 69.35 84.88 64.73
South China (pressurised) 104.10 123.73 118.57 127.80 84.55 129.29 168.94 134.86 123.14 120.20 115.19 120.00
East China (refrigerated) 77.95 85.46 12.14 59.40 -23.05 28.86 62.03 77.07 69.71 74.35 89.88 69.21
South China (refrigerated) 77.95 85.46 12.14 59.40 -23.05 28.86 62.03 77.07 69.71 74.35 89.88 69.21
Taiwan 86.05 89.09 71.05 62.55 36.09 44.91 63.14 85.48 68.57 75.90 91.26 81.02
Japan 86.05 89.09 71.05 62.55 36.09 44.91 63.14 85.48 68.57 75.90 91.26 81.02
Mont Belvieu ¢/USG
LST 119.94 124.71 112.49 105.43 69.89 66.20 64.32 61.91 61.33 56.39 51.09 51.65
Non-LST 123.13 126.35 113.83 106.38 74.32 69.02 70.14 65.62 65.69 59.21 52.49 54.39
Europe $/t
Coasters fob NWE 737.25 725.50 583.65 541.45 440.62 321.24 444.70 478.68 353.23 369.26 335.09 310.17Barges fob NWE 765.80 738.00 586.78 547.85 427.86 327.31 450.90 446.57 400.98 372.37 369.05 340.17
Coasters fob Med 788.90 758.64 657.13 604.80 619.67 414.69 596.10 579.05 429.55 509.47 374.59 412.70