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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



© 2015 Argus Media Ltd www.argusmedia.com

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

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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




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





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





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



18 August 2015Argus LPG World —


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





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





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





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





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





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





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





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





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





INTERNATIONAL LPG

Markets


400

600

800

1,000

NWE

Japan

Propane NWE, Japan $/t Propane NWE, Japan $/t


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



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

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