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T W I C E M O N T H L Y NEWS, PRICES AND ANALYSIS VOLUME XX, ISSUE 13, 2 JULY 2014

LPG World

© Argus Media Ltd www.argusmedia.com

Editorial: The coming of condensates 2

News/inventories

US LPG exports hit another monthly record 3

UGI to buy Totalgaz 3

Turkmen exports to use Argus prices 3

Japanese LPG stocks rise in May 3

Enterprise export facility begins maintenance 4

South Korean LPG stocks fall 4

Astomos orders another VLGC 4

US propane stocks rise 4

China’s shale gas prospects under debate 5

BNP Paribas pays price for violations 6

Iranian LPG heads to South Africa 6

Japanese LPG retailers exit challenging market 7

Targa Resources and ETP end merger talks 8

UK government ‘misses’ opportunity 9

UK vague on scope of financial market review 10

Data

Shipping/Transport 11

Market review — Europe 12

Market review — Asia 13

Market review — Americas 14

Prices 16

Inside

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Regulators have relaxed tight controls on the country’s condensate exports to remove a domestic supply glut — but look unlikely to do the same for crude exportsThe US Commerce Department has decided to allow two US firms to export distilled condensate, in a move that could undermine the economics of some US condensate splitter projects.

The department’s Bureau of Industry and Security (BIS) has authorised US independent Pioneer Natural Resources and natural gas liquids giant Enterprise Products Partners to export condensate from the Eagle Ford shale field in south Texas that has been processed in a distil-lation tower but not run through a splitter.

Enterprise is already the major US exporter of LPG from the US Gulf coast and recently announced plans to proceed with the construction of a US Gulf coast ethane export facility (LPGW, 7 May, p6).

The US, which does not restrict LPG exports, tightly controls domestic crude exports — although they almost doubled to 120,000 b/d last year, and reached 250,000 b/d in January-April this year. But it does allow refined products exports.

Output soarsThe US produced 750,000 b/d of con-densate in 2012, according to the most recent US EIA data. This is lower than consultancy RBN Energy estimates of 1mn b/d. But US condensate cannot be exported unless it is distilled. Pioneer and Enterprise approached the BIS to determine if their limited distillation pro-cesses qualify.

US producers have been watching for signals that the government may be

willing to ease the country’s decades-old oil export restrictions.

The Commerce Department insists that the approvals represent no change in policy. The excitement is “another false alarm”, US bank Morgan Stanley says. But approvals do show that the government “is being thoughtful about the crude export issue”, it says. Other producers will now be more aggressive and creative with export applications, the bank says.

The department’s newly dem-onstrated flexibility will be enough to absorb incremental US production in the medium term, UK bank Barclays says. But it does raise questions about the viability of over 450,000 b/d of splitter projects (LPGW, 15 April, p6).

US midstream operator Kinder Morgan plans to open the first phase of a 100,000 b/d splitter in Houston in November. US firm Magellan Midstream Partners says its 50,000 b/d splitter in Corpus Christi, Texas, due on stream in late 2016, will not be affected.

But independent refiner Phillips 66 is less definite, and notes a plan to build a condensate splitter at its 247,000 b/d Sweeny refinery is still at an early stage.

Marathon Petroleum sees little threat to its plans to build condensate splitters in the midcontinent, chief executive Gary Heminger says. The plants will process Utica and Marcellus condensates. “I do not see that the Utica and Marcellus really tee up that well for export,” he says.

US condensates poised for export

‘The decision to exclude LPG condensing boilers [in the UK Green Deal Home Improvement Fund] is a missed opportunity’ — UKLPG chief executive Rob Shuttleworth (see p9)

© 2014 Argus Media Ltd www.argusmedia.com

2 July 2014Argus LPG World

The US Commerce Department’s deci-sion to allow two firms to export lightly distilled condensate from south Texas is no game changer. Washington retains tight controls over crude exports, and is likely to for some time, given heavy political resistance to change (see p1).

But authorising even limited volumes of US condensate to ship overseas brings efficiencies to global markets for very light oil and potentially removes a glut that would otherwise hamper US Gulf coast refining operations.

The department, through its Bureau of Industry and Security (BIS), has authorised independent Pioneer Natural Resources and natural gas liq-uids (NGLs) giant Enterprise Products Partners to export stabilised condensate from the Eagle Ford shale field.

Stabilisation involves removing con-taminants and distilling out the most volatile fractions — particularly methane and ethane — to make the liquids easier to store and transport. It falls short of the process that takes place in condensate splitters, which fully separates conden-sates into all their component fractions,

including volatile NGLs, naphtha, jet fuel and diesel.

The Commerce Department insists that the approvals represent no policy change, and the White House seems genuinely mystified by all the interest. But the decision will encourage other US pro-ducers to petition the BIS to certify their stabilisation processes, and could allow the export of more light liquids.

Asia-Pacific is the obvious destina-

tion for US condensates. International sanctions on Iran have limited supplies east of Suez. And the region’s supply shortfall will only get worse with the start-up of 380,000 b/d of new splitter capacity in Singapore and South Korea before the end of this year (LPGW, 1 April, p10).

Not everyone will be pleased with producers’ ability to export stabilised condensates. The economics of many new US splitter projects have suddenly been brought into question, as over 450,000 b/d of these are in the planning or construction stage.

But the rise in very light crude pro-duction raises problems for US Gulf coast refiners that have invested heavily in upgrading equipment to run heavier and sourer grades. Complex refineries will eventually face operational limits as feedstocks get lighter, creating bot-tlenecks in secondary processing units. Exporting condensates will help prevent local crude slates from getting too light.

The US oil sector wants Washington to show commitment in easing decades-old crude export restrictions. But it is a big step to take. The federal government would have to overturn restrictive Jones Act rules on intra-US tanker shipments to level the playing field for its east coast refiners. For now, being able to export stabilised condensates represents a small victory in a larger war.

E d i t o r i a l

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The coming of condensates

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2 July 2014Argus LPG World — In brief

EuropeUGI to buy TotalgazUS LPG distributor UGI will buy Total LPG subsidiary Totalgaz for around €400-450mn ($546-614mn). The deal is likely to be concluded in the first half of 2015, subject to regulatory approvals. Total is working closely with employee repre-sentatives to lay the groundwork for a deal on protecting jobs and employee benefits. Totalgaz employs around 750 people in France and generates rev-enues of €1bn. The company distributed 525,000t of LPG last year to residential, commercial, industrial and autogas cus-tomers. UGI’s European LPG sales over the same period hit 1.2mn t, including 495,750t sold by its French LPG subsidi-ary Antargaz. Total and Antargaz share a 38,000t LPG storage facility at Donges, located on the northwest coast and a small 5,400t storage facility at Ambes near Bordeaux.

Spanish autogas demand rises againSpanish consumption of autogas con-tinued its recent growth in April, accord-ing to data from the country’s energy and markets regulator CNMC. Autogas demand reached 2,857t in April, up from 2,551t in the previous year. Spanish auto-

gas consumption has now grown every month — apart from December 2013 — for more than three years. Demand rose by more than 20pc, compared with a year earlier to 10,970t in January-April. The growth reflects greater consump-tion by bus and taxi fleets in Barcelona, Madrid and Valencia (LPGW, 20 May, p8).

Murphy to sell Milford Haven refineryUS firm Murphy Oil has reached an agreement in principle to sell the 130,000 b/d Milford Haven refinery in the UK to Geneva-based investment group Klesch, with the chances of a deal put at 50:50. Klesch aims to retain Milford Haven for refining purposes. But Murphy’s local subsidiary, Murco, would use the refinery as a terminal, if no deal is finalised. The refinery ceased operations at the end of May but has been kept in a “ready-to-operate” status and would take only days to restart. The facility is being used for storage to supply Murphy’s retail operations in the UK.

FSUTurkmen exporters to price against ArgusTurkmenistan president Gurbanguly Berdymukhamedov has signed a gov-

ernment resolution to make price report-ing agency Argus an officially recognised source of market pricing information. This means that exporters of LPG, crude, refined products and petrochemicals can use Argus prices in their contracts. Turkmenistan exports to central Asia, China and the Mediterranean. The coun-try exported 458,000t of LPG last year, mainly to Afghanistan, and 2.9mn t of products, of which 1.3mn t was fuel oil.

Asia-PacificJapan’s LPG stocks rise in MayJapanese LPG stocks increased to 1.8mn t in May, up by 2.8pc from a month earlier, as milder weather reduced heating demand. Propane inventories rose by 4.4pc to 1.1mn t in May, while butane stocks edged higher by 0.8pc to 762,000t, according to the Japan LP Gas Association. LPG con-sumption fell by 6.9pc to 1.1mn t, with an 11.7pc decline in propane demand to 801,000t outstripping an 8.7pc rise in butane use to 301,000t. The country’s LPG imports dropped by 2.8pc on the month to 905,000t in May, while produc-tion fell by 0.8pc to 246,000t.

Latin AmericaArgentina province delays shale tenderArgentina’s southern Neuquen province has delayed a tender for eight oil and gas blocks in the shale-rich Vaca Muerta formation amid discussions between the federal and provincial governments over amending the country’s hydrocar-bons law. Neuquen expected to sign contracts in August but the process has been put on hold indefinitely. Buenos Aires’ negotiations with governors of oil-producing provinces were expected to move quickly. But they have taken a back seat amid the government’s efforts to stave off a new debt default after the US Supreme Court refused to hear the country’s appeal in its long-standing legal battle against creditors that hold Argentinian defaulted bonds.

US LPG exports hit a record high of 506,000 b/d (1.3mn t) in April, up by 22pc from March, according to the US EIA.

The previous record was set in December last year, when the US shipped 431,000 b/d abroad. Exports slowed during the first quarter of this year as robust crop-drying demand, low winter temperatures and soaring exports sparked North American propane sup-ply shortages (LPGW, 21 January, p1).

Total natural gas liquids (NGLs) exports also hit a record high in April, at 697,000 b/d, up by 20pc from 581,000 b/d in March. The EIA analysis counts natural gasoline as part of NGLs.

Propane accounted for 82pc of LPG

exports at 414,000 b/d (33,390 t/d), while butane exports totalled 75,000 b/d (6,944 t/d). Ethane exports reached 17,000 b/d (960 t/d). Movement of ethane to Canada began in February. Calgary-based Nova Chemical began cracking US-produced ethane at its 771,000 t/yr ethylene plant in Joffre, Alberta, earlier this month. The cracker is sourced through the 40,000 b/d Vantage pipeline (LPGW, 6 August, p7).

Japan overtook Mexico as the big-gest importer of US LPG, absorbing 57,000 b/d, a 20,000 b/d increase from March. Canada’s imports also topped Mexico’s level in April. Imports grew by 11,000 b/d to 53,000 b/d.

US exports set another monthly record


2 July 2014Argus LPG World —

US midstream operator Enterprise Products Partners’ 7.5mn b/month Houston Ship Channel LPG export ter-minal began its two-week scheduled maintenance on 23 June.

Cargo lifters had already factored in the planned outage into their schedules months earlier, but the works could still lend some relief to a tight shipping market that has seen unprecedented volatility in spot very large gas carrier (VLGC) shipping rates.

The biggest impact of the shutdown will be in domestic price reactions as the US EIA factors the export stoppage into weekly stockpile figures. The out-age will lead to stockbuilds of at least 4.4mn-4.95mn bl, based on the number of VLGCs that would have loaded at the Enterprise facility (LPGW, 1 April, p6).

The Enterprise terminal handled 10 VLGCs in June, while 11 export cargoes are expected this month — down from the average of 14-15 cargoes/month. Premiums for fob waterborne vessels could soar during the outage, market participants say.

Lifters that typically sell two-day loading windows at the Enterprise ter-minal on a fob Mont Belvieu price basis may opt instead to sell a fob water-borne loaded vessel. Such negotiations factor in terminaling fees, which are currently pegged at 13¢/USG, and give the buyer the responsibility to take over the ship’s charter party.

With most vessels booked through the end of July, the two-week shutdown is unlikely to give temporary relief to the strong rates (LPGW, 7 May, p1).

In brief

US propane inventories rose by a slightly smaller-than-expected 2.43mn bl to 53.67mn bl in the week ended 20 June, according to the latest US government EIA data. Inventories now stand at 5pc above the five-year aver-age for this time of year.

US Gulf coast stocks increased by 1.45mn bl to 30.1mn bl, while midcon-tinent propane stocks rose by 593,000 bl to 17.15mn bl, or 16pc below the five-year average. East coast inventories climbed by 251,000 bl to reach 4.05mn bl in the period, while Rocky Mountain and west coast inventories inched higher by 133,000 bl to 2.3mn bl.

US stocks rise

US propane inventories mn blRegion 20 Jun 13 Jun 21 Jun 13

East coast 4.057 3.806 3.699

Midcontinent 17.158 16.565 18.024

US Gulf coast 30.182 28.729 31.467

Rocky Mts, west coast 2.274 2.141 1.659

Propylene* 4.015 4.085 3.091

Total 53.671 51.241 54.849

*included in US Gulf coast total — EIA

Enterprise terminal starts maintenanceSouth Korea’s private-sector LPG stocks fell to 246,801t in May, down by 10pc from April, as a 24.5pc drop in propane stocks to 99,081t out-weighed a 3.4pc rise in butane stocks to 147,720t. LPG imports fell by 4.1pc on the month to 441,421t in May, with a 38.3pc drop in propane supplies.

South Korean stocks fall

Japanese LPG importer Astomos Energy has ordered another very large gas carrier (VLGC), in an effort to expand its US LPG imports ahead of the completed expansion of the Panama Canal in early 2016.

Japanese shipbuilder Kawasaki Heavy Industries (KHI) will deliver the new 82,200m³ LPG vessel in the fourth quarter of 2016. The vessel will help Astomos replace its ageing fleet. The companies did not disclose pric-ing terms of the deal.

The latest deal brings Astomos’ order book to four LPG vessels since late last year. The company ordered an 83,000m³ carrier from Japan’s Mitsubishi Heavy Industries (MHI) in March, after agreeing deals with MHI and KHI for 83,000m³ and 82,200m³ vessels, respectively, in December last year. All the vessels are designed to pass through the Panama Canal. Astomos handles around 10mn t/yr of LPG on 21 vessels, but expects trad-ing volumes to increase to over 12mn t/yr in 2015 (LPGW, 1 April, p4).

Astomos orders VLGCSingapore-based LPG shipowner Epic Gas will receive a third 7,500m³ fully-pressurised LPG carrier, as part of its extensive newly built ship programme. The vessel, due for delivery in the fourth quarter of 2016, will be built at Japan’s Sasaki Shipbuilding.

The announcement continues the rapid expansion of Epic’s fleet through a combination of a substantial ship-building programme and acquisitions of second-hand tonnage. It has already taken delivery of four new ships and purchased four second-hand vessels so far this year. The newly built 5,000m³ Epic St Thomas and the 7,200m³ Epic Bell joined the fleet in January-March and were followed by the 5,000m³ Epic St Croix and 7,200m³ Epic Bird in the second quarter (LPGW, 7 May, p3).

The 2001-built 7,200m³ Epic Barbados and the 2007-built 5,000m³ Epic St George were acquired in the first quarter, while Epic earlier in June purchased two second-hand 9,500m³ vessels — the 2007-built Mayfair and 2006-built Charlton.

Epic Gas adds to fleet

South Korean LPG balance ’000tMay 14 Apr 14 May 13

Production 180.5 171.0 147.2

Propane 59.7 51.8 52.6

Butane 120.8 119.2 94.6

Imports 441.4 460.5 472.4

Consumption 684.3 646.6 716.7

Propane 244.8 255.9 276.2

Butane 439.5 390.6 440.6

Exports 3.0 5.3 0.568

Stocks 246.8 274.2 270.4

— KNOC



News

The success of state-controlled oil firm Sinopec’s Fuling pio-neering shale gas project has reinvigorated China’s shale gas ambitions. But local geologists argue that the block is not a true shale formation, adding doubts to the sector’s outlook.

If Fuling is not the technical breakthrough in shale develop-ment that Beijing had hoped for, then knowledge gained there may be inapplicable to actual shale blocks, dashing hopes of a domestic shale gas revolution. And it raises doubts as to whether the block is eligible for shale gas production subsi-dies, although Sinopec insists that it meets the criteria.

Pilot projectFuling has been approved as a shale gas pilot zone by the national energy administration, a unit of economic planning agency the NDRC, Sinopec says in its response to the geolo-gists’ scepticism. The field produces 3.1mn m³/d, far more than other shale blocks in southwest China’s Chongqing municipality (LPGW, 4 February, p3).

But much of Fuling’s output is tight sandstone and con-ventional gas. Tight gas is less complex to extract than shale gas. Fuling’s geology makes it far more suitable for gas devel-opment than other blocks, so its success may prove hard to duplicate elsewhere. China will struggle to lift shale gas output beyond the 10bn m³/yr anticipated from Fuling by 2017 if the project is the main driver of shale development.

The NDRC wants to increase its shale gas production target

for next year to 7.6bn m³ from a goal of 6.5bn m³ set in 2012. The latest target is ambitious, especially if a portion of Fuling’s output is counted as conventional. Sinopec aims to produce 1.8bn m³ of shale gas in 2014, 5bn m³ in 2015 and 10bn m³/yr by 2017, mainly from Fuling.

There appears to be little enthusiasm for shale gas pro-jects elsewhere in China. Fellow state-controlled energy firm PetroChina aims to produce 2.6bn m³/yr of shale gas by next year, 73pc more than it initially projected. But its invest-ment budget for shale remains modest — it plans to spend just 2.2pc of its upstream capital expenditure of 226bn yuan ($36.4bn) on shale gas in 2014-15.

Economies of shaleA third round of Chinese shale gas block auctions has been delayed again, having been originally scheduled for the first quarter of this year. Beijing says it is struggling to attract inter-est, although slow progress following the two previous rounds has also held back the process.

Just two wells have been drilled at the 21 shale blocks auctioned since 2011. This is partly because of the econom-ics of shale gas development in the country — a shale gas well costs Yn50mn-70mn to drill, far more costly than con-ventional wells. The government is supposed to subsidise shale gas output at Yn200-400/’000m³, but such subsidies are rarely paid on time.

China’s shale gas prospects under debate

A growing range of oil firms based in the US are developing tax-advantaged midstream companies.

Shell may become the first of the majors to develop a master limited part-nership (MLP) structure as favoured by upstream firms and US independent refiners over the past decade.

MLPs are already a common cor-porate structure for US natural gas liq-uids (NGLs) firms such as Enterprise Products Partners and Kinder Morgan. Williams Partners became a major upstream creator of the MLP in 2005. All US independent refiners have formed or are forming MLPs, following the more tra-ditional upstream and midstream efforts.

A unit of European commodities trading company Vitol proposes form-ing an MLP with assets in Asia-Pacific and Europe, as well as a major Florida

products terminal. And US firms Consol Energy and Noble Energy will seek investment in a pipeline system moving Marcellus shale production to market (LPGW, 17 June, p7).

The companies offer quarterly divi-dends and avoid corporate taxes as pub-licly traded limited partnerships. Investors avoid the risks associated with the com-modities that the MLPs move, while con-trolling companies attract attention to undervalued midstream assets and gain revenue as the MLP’s general partner.

Traditional MLPs must derive income from acquisitions and revenue generated through stable, fee-based midstream businesses, such as pipelines and stor-age space. Investors seek partnerships that can grow dividends, so refiners offer their pipeline and storage infrastructure in addition to acquiring assets.

The latest round of MLP offerings follows the midstream tradition of serv-ing multiple customers. The joint venture needs funds to develop a US Atlantic coast region that lacks gas infrastructure.

Shell aims to create an MLP, in which Shell Midstream Partners will hold minority stakes in four pipeline systems, including a controlling 43pc in Shell’s 360,000 b/d Ho-Ho pipeline that connects Houston, Texas, to Houma, Louisiana. Traditional midstream MLPs Buckeye Partners and NuStar Energy hold assets in the Caribbean, but Vitol unit VTTI may be the first to offer international assets as far away as the Middle East (LPGW, 15 April, p10).

Initial assets for the MLP comprise a 36pc interest in a firm that owns six terminals totalling 36mn bl of storage throughout the world.

MLP structure attracts new users



News

French bank BNP Paribas has agreed to pay almost $9bn to settle charges that it conspired to violate US sanctions laws covering Sudan, Iran and Cuba, engaging in US dollar-based transactions in part to support oil and gas projects.

US authorities accuse the bank of moving at least $8.84bn through the US financial system on behalf of sanctioned enti-ties. BNP Paribas on 9 July agreed a guilty plea on conspiring to violate the International Emergency Economic Powers Act and the Trading with the Enemy Act over at least 2004-12.

Much of the probe focused on a business line formerly known as Energy Commodities Export Project, which provided letters of credit and syndicated loans to help finance oil, LPG and other projects, according to court documents filed as part of the settlement agreement. BNP Paribas concealed or obscured references to sanctioned entities in 3,897 transac-tions routed through US banks, according to the US Treasury Department’s Office of Foreign Assets Control.

“BNP Paribas went to elaborate lengths to conceal prohib-ited transactions, cover its tracks and deceive US authorities,” US attorney general Eric Holder says. Bank officials “deeply regret the past misconduct that led to this settlement”, BNP Paribas chief executive Jean-Laurent Bonnafe says. The “fail-ures” brought to light by the investigation “run contrary to the

principles on which BNP Paribas has always sought to oper-ate”, he says.

The US Justice Department says most of the illegal pay-ments were made on behalf of entities in Sudan — before the country’s partition. BNP Paribas processed about $6.4bn through the US on behalf of sanctioned Sudanese entities over July 2006-June 2007, including $4bn on behalf of a bank owned by the Sudanese government.

Moving moneyBNP Paribas processed $586mn in payments on behalf of an unnamed Iranian-controlled company to provide LPG to a cli-ent in Iraq over 2006-12, court documents show. The Iranian-controlled company was registered as a Dubai company, but BNP Paribas’ “know your customer” documentation showed this firm was really controlled by an Iranian entity.

US Justice Department and New York state officials had contacted BNP Paribas in early 2010 regarding transactions with sanctioned entities. The bank agreed to launch an inter-nal compliance investigation and to co-operate with US and New York authorities, but BNP Paribas continued to process transactions on behalf of the Iranian-controlled company for more than two years.

BNP Paribas pays the price for violations

The Australian government’s Bureau of Resources and Energy Economics (Bree) has upwardly revised its Australian LPG export forecasts for the financial year to 30 June, as well as for the 2014-15 financial year.

Australian LPG exports are now likely to average 3,570 t/d in the 2013-14 financial year, compared with 3,485 t/d in 2012-13, and rising further to 3,825 t/d in 2014-15, Bree says.

The latest forecasts contained in its June quarterly outlook report compare with the previous estimates of 3,400 t/d for both 2013-14 and 2014-15 that were made in the March quarterly report.

Australian LPG production is esti-mated to reach 5,185 t/d in 2013-14, unchanged from the previous fore-cast, and 5,610 t/d in 2014-15. This compares with Bree’s previous esti-mate of 5,100 t/d in its March quar-terly outlook.

Australian exports to riseIran on 14 June agreed to sell 2mn t/yr of LPG and oil products to South Africa, according to Iranian Oil, Gas and Petrochemical Products Exporters Union head Hassan Khosrojerdi.

The deal followed the visit of a 40-member trade delegation from the South African private sector to Tehran. The visit aimed to improve bilateral economic ties between the two gov-ernments. The delegation was led by South African foreign minister Maite Nkoana-Mashabane.

Non-oil trade between the two coun-tries stood at $52.5mn in the most recent Iranian calendar year, which ended on 20 March.

Bilateral trade between Iran and South Africa could potentially reach $2bn/yr, according to Iran’s ambassa-dor to South Africa, Mohammad Faraji.

Iran is sitting on the largest gas reserves in the world, according to BP’s latest Statistical Review of World

Energy. But it has been prevented from taking full advantage of its posi-tion because of its large gas network, overconsumption and sanctions that have set back field development and gas export plans (LPGW, 20 May, p6).

Iran’s 1mn t/yr of LPG exports mainly head to China, India, Indonesia and South Korea, according to Iranian Gas Commercial chief executive Mohammad Ali Barati.

Trade sanctions imposed against Iran have prohibited insurance cover on very large gas carriers (VLGCs), which makes it difficult for buyers to purchase LPG from Iran (LPGW, 21 May 2013, p5). In order to circumvent this, Iran has made plans to order 12 VLGCs to supply gas to its Asia-Pacific customers on a cfr basis rather than a fob basis. China, the largest Asia-Pacific importer of Iranian LPG, has also been acquiring VLGCs to secure supplies from Iran.

Iranian LPG heads to South Africa



Japan’s LPG industry is coming under further pressure, as stagnant household demand has led to a significant contrac-tion in the number of small retailers.

LPG retailers in the country totalled 20,600 in March, down by 2pc from 21,052 in the previous year — but over 21.7pc lower than the 26,290 retailers one decade earlier, according to ministry of economy, trade and industry (Meti) data.

LPG requirements from the household sector — which accounts for the largest share in Japan’s overall LPG consumption — has declined for a third consecutive year. Household demand reached 8mn t in the 2013-14 financial year that ended on 31 March, down by 2.7pc from a year earlier, and lower by 15.3pc from around 9.5mn t in 2004-05, according to Japan LP Gas Association data.

Declining family valuesJapan’s LPG retailers are typically small companies, includ-ing many family-owned businesses. Weakening LPG demand has prompted retailers, especially those that do not have any children or other relatives to take over the business, to make the difficult decision of selling out or closing down.

Meti forecasts point to a continuing trend of falling house-hold sector LPG demand, to 6.2mn t in 2018-19, down by another 22.5pc from 2013-14.

Households are increasingly meeting their energy needs through competitively-priced town gas, as those producers

step up their efforts to expand pipeline networks. Town-gas retail prices are lower compared with propane. A typical household in the Tokyo metropolitan area paid an average of ¥5,721/month ($56/month) for town gas in the last financial year, or 19pc cheaper than LPG’s average ¥7,088/month.

But the outlook may be more complex than it appears. Demand from rival town-gas suppliers is also helping to curb declines in overall LPG sales. Town gas uses LPG as a feedstock to increase calorific value (CV) to meet standards. LPG requirements from the sector rose by 4.4pc to 1.18mn t in 2013-14 from 1.13mn t in 2012-13.

Lean demandThe rising use of lean LNG, which has a relatively low CV compared with conventional gas, is also boosting demand for LPG as a heat additive. Meti expects demand for LPG as a town-gas feedstock to reach 1.49mn t in 2018-19, driven by LNG exports from coal-bed methane fields in Australia that are scheduled to begin in the fourth quarter of this year, and the start-up of US shale-gas derived LNG exports in 2017-18 (LPGW, 15 April, p7).

Japan’s overall LPG demand hit 15.5mn t last year, down by 6.4pc from 16.6mn t in 2012-13, as a rise in consumption by the town gas and petrochemical sectors was outweighed by declines in demand from household, industrial, autogas and especially power users.

Retailers exit challenging market

Japan

Japanese LPG imports in May increased by 32pc to 873,575t from April, with propane deliveries up by 37.5pc to 768,571t and butane car-goes higher by 0.5pc to 105,004t.

LPG importers boosted cargoes from the Middle East and the US in the period. Imports from the UAE surged by 159.6pc from a month earlier to 347,230t, while Qatari supply rose by 20.3pc to 194,740t, according to finance

ministry data. Saudi Arabian propane supplies resumed in May, at 66,883t, after no cargoes were delivered in April — the first time that Japan did not reg-ister Saudi imports in over 50 years. The increases more than offset a 62.5pc decline in Kuwaiti imports to 73,634t.

US LPG imports totalled 88,425t, more than double the 44,087t imported in April. But imports from Australia fell by 27.1pc to 57,364t.

LPG imports rise sharplyJapanese town-gas sales fell to 2.8bn m³ in May, down by 1.5pc from 2.9bn m³ in the previous year, as higher tempera-tures capped heating demand.

Household sector town-gas sales reached 794.1mn m³ in May, lower by 7pc from the same period one year ear-lier, according to Japan Gas Association data. Commercial sector demand dropped by around 6pc to 295.6mn m³ over the period. The declines out-weighed a 3.5pc rise in consumption from the industry sector to 1.6bn m³.

Tokyo Gas, Japan’s biggest town-gas supplier by sales volumes, sold 1.1bn m³ in May, up by 5pc from a year earlier. Rival supplier Osaka Gas saw sales decline by 4.8pc to 646mn m³, while distributors Toho Gas and Saibu Gas posted falls of 9.2pc to 291.8mn m³ and by 1.5pc to 67.3m m³, respectively.

Town-gas sales down

Japan’s LPG imports tMay 14 Apr 14 May 13 Jan-May 14

Saudi Arabia 66,883 0 126,317 513,492Qatar 194,740 161,887 306,046 1,268,406Kuwait 73,634 196,463 95,500 618,570UAE 347,230 133,732 194,073 1,333,620Australia 57,364 78,678 64,688 350,868US 88,425 44,087 52,505 522,516Others 45,299 48,640 25,408 321,272Total 873,575 663,487 864,537 4,928,744 — finance ministry



US midstream firms Targa Resources Partners and Energy Transfer Partners (ETP) in late June ended talks on a possible merger. The move could have created a strong challenger to US natural gas liquids (NGL) industry leader Enterprise Products Partners, as well as lead to higher processing and storage fees.

Houston-based Targa confirms that it held talks with the larger ETP about a merger, only to terminate discussions. But Targa has signalled a willingness to resume meet-ings in future. The company owns and operates natural gas transport and processing assets around the country, although one of its most attractive assets is its gas gather-ing, processing and export facility in Galena Park, Texas. Targa currently exports between 3.3mn-3.85mn bl/month from the Houston Ship Channel facility, which will expand to its nameplate capacity of 5.5mn-6mn bl/month in the third quarter (LPGW, 21 January, pp9-10).

Network strengthDallas-based ETP owns a larger network of pipelines, pro-cessing and storage facilities, including crude handling sys-tems and a retail marketing business.

ETP subsidiary Sunoco Logistics operates the Marcus Hook terminal in Philadelphia, Pennsylvania, which will be expanded to export 2mn bl/month of LPG. Sunoco aims to open a facility in Nederland, Texas, by the first quarter of 2015 that will have export capacity of 6mn bl/month. The Nederland project already has long-term contracts with Shell, which will export between 8-10 cargoes/month. Shell appears to be in the marketplace tendering to sell quarterly spot fob cargoes for next year (LPGW, 20 May, p6).

A combined Targa and ETP would have roughly 13mn bl/

month of export capacity by the end of next year. But this still lags behind Enterprise’s continuing and aggressive expansion plans to 16mn bl/month by 2015 from capacity of 7.5mn bl/month now (LPGW, 3 June, p4).

A combined Targa and ETP could lead to a rise in storage and processing fees, driven by the contraction of competition among the major NGL players at the key processing and stor-age hub of Mont Belvieu, Texas.

Enterprise holds a competitive edge over Targa with lower terminaling fees at its export facility — pegged at a 2¢/USG discount to Targa, which charges 15¢/USG. But Enterprise’s 13¢/USG loading rate would vary depending on customer and contract terms, favouring long-standing customers with longer contracts.

A merger would have advantages beyond bigger export volumes, such as bringing an expanded reach into the domes-tic US market. ETP’s Lone Star terminal (LST) in Mont Belvieu reaches Chicago via the 660,000 b/d Explorer pipeline, with product transported north to the diluent market in Edmonton, Alberta, through the 70,000 b/d Cochin pipeline. Natural gaso-line at Targa’s terminal can go along the same path as LST barrels, but it can also be shipped for gasoline blending at US pipeline operator Kinder Morgan’s terminal in Pasadena, Texas.

Costly marriageThe likelihood of Targa and ETP returning to merger discus-sions is hard to predict, but any transaction will likely be expensive, analysts say. Targa Resource Partners, one of the two entities that make up Targa, has a market capitalisation of around $8bn, while Targa Resources has a market capitalisa-tion of $5.8bn. ETP’s market capitalisation is around $17.9bn.

Targa and ETP terminate merger talks

North America

North American LPG rail carloads totalled 72,968 in the first quarter of this year, up by 6pc from the previous year and 20pc higher than the four-year quarterly aver-age, according to Argus data.

LPG volumes transported in January-March were the second high-est since mid-2009, slightly lagging the 75,587 carloads transported by rail in fourth-quarter 2013. A carload is equiv-alent to roughly 25,000USG of LPG, or about 595 bl. The Argus Rail Analytics database includes figures on the US operations of the seven largest North American railroads.

As US shale production continues

to surge and outpaces new pipeline transportation capacity, rail has played an increasingly important role in ship-ping hydrocarbons to key demand centres. LPG, or propane and butane, moves in pressurised cars, while crude oil and other refined products can be shipped in general purpose cars at ambient temperatures.

Rail deliveries are expected to con-tinue its growing role in the LPG arena. US midstream operator Kinder Morgan this month will begin operations on its reversed 70,000 b/d Cochin pipeline, which will transport diluent into western Canada rather than propane out of

Alberta and onto midcontinent buyers (LPGW, 4 March, p10).

Canadian propane producers and US customers will rely more heavily on rail to get propane to market later this year, when crop-drying in the autumn and winter heating demand pick up.

Retail co-operative CHS has already increased its LPG rail capacity, in an effort to fill the void caused by the Cochin reversal. The company will invest around $24mn in new midconti-nent rail terminals in Black River Falls, Wisconsin; Rockville and Glenwood, Minnesota; and Carington, Hannaford, and Fairmont, North Dakota.

Rail transit surges



Industry trade association UKLPG has criticised the UK gov-ernment for excluding LPG condensing boilers from its Green Deal Home Improvement Fund.

UK households from 1 June are eligible to recoup up to £7,600 ($12,891) in energy efficiency improvements, under the fund developed by the government’s Department of Energy and Climate Change (Decc).

“The decision to exclude LPG condensing boilers is a missed opportunity to drive up household energy efficiency, cut energy bills and deliver significant environmental benefits,” UKLPG chief executive Rob Shuttleworth says.

Low emissions advantageUKLPG notes that LPG has the lowest greenhouse gas emis-sions profile compared with other fuels used by customers off the national gas grid, and is less polluting than some biofuels.

“This decision underlines the government’s lack of under-standing of how this policy will continue to disadvantage thousands of off-grid energy consumers,” Shuttleworth says.

UK climate change minister Greg Barker and energy min-ister Michael Fallon announced that oil and LPG-fired boilers would be excluded from the fund, as well as the Renewable Heat Incentive (RHI) — a payment scheme to reward consum-ers who generate heat from renewable energy sources.

“Incentivising oil and LPG-fuelled boilers in this context would undermine the design of the RHI, and potentially cause confusion for the consumer,” Barker says.

UKLPG and Decc officials will meet this month to discuss the exclusion of LPG condensing boilers. “Discussing this issue is a matter of urgency, and it is vital that the government reconsiders this decision,” Shuttleworth says.

New technology, such as micro combined heat and power boilers and gas absorption heat pumps that run on LPG, would be affected by the decision, the association says (LPGW, 15 October, p9). UK LPG consumption is dominated by the petrochemicals sector, which consumes 1.3mn t/yr of overall demand, at 3mn t/yr. The household cooking and heat-ing sector consumes just 297,000 t/yr.

UK/Asia-Pacific

UKLPG blasts government for ‘missed opportunity’

The Indian government has increased prices of non-subsidised LPG, gasoline and diesel, as the Iraqi crisis underpins higher crude oil and products prices, and the weakening of the Indian rupee.

The price of non-subsidised 14.2kg LPG cylinders rose by 1.8pc to 922.50 rupees ($15.40) on 1 July, while gasoline prices moved higher by Rs1.69/litre to Rs73.60/l in Delhi, according to state-run refiner IOC. The price of diesel increased by 50 paise/l to Rs57.84/l and jet fuel prices rose by around 0.6pc to Rs70.16/l. But the price of a subsidised 14.2kg cylinder was left unchanged at Rs414.

Non-subsidised cylinder rates were actually reduced by Rs23.50 in June. Delhi has cut non-subsidised cylin-der prices by a total of Rs336 in five instalments, since February. Diesel and non-subsidised LPG prices are changed every month by state-run refiners in line with international levels.

Around 89pc of India’s 150mn LPG consumers meet their annual demand through the government’s cap of 12 subsidised 14.2kg cylinders, and must buy additional cylinders at market prices. The cooking fuels are forecast to account for 69pc of total subsidies — at $19bn — in the 2014-15 financial year ending 31 March 2015, the oil ministry says. LPG alone accounts for around 44pc of the subsidy bill (LPGW, 3 June, p6).

India consumed 1.43mn t of LPG in May, up by 14pc from a year earlier and 6pc from the previous month to record a ninth consecutive monthly increase.

India raises fuel prices Chinese propane dehydrogenation (PDH) producer Ningbo Haiyue has received its first propane cargo, ahead of the start-up of its new plant in Zhejiang province.

The 44,000t cargo arrived on board the Middle Easton on 23 June. The company will use the cargo for its 600,000 t/yr PDH plant in Ningbo, which also includes a 300,000 t/yr polypropylene unit. The plant is still undergoing checks and is expected to come on line during the second half of this year — possibly this month. It was planned to begin opera-tion earlier this year.

The prospect of procuring cheap US propane has helped spur a wave of new investment in Chinese PDH plants. It has already resulted in various term supply deals being agreed with US exporters, which will take effect once the Panama Canal expansion is completed in 2016. Around 70,000 b/d of planned new PDH capacity is expected this year, potentially boosting LPG imports to around 125,000 b/d in 2014 from 95,000 b/d last year (LPGW, 18 June 2013, p6).

PDH is an important intermediary chemical in the pro-duction of propylene from propane. China has been step-ping up its construction of PDH plants because the country is chronically short of propylene and depends on imports for as much as 30pc of its demand.

Chinese imports of US LPG are growing, although most supplies still come from the Middle East. US deliveries into the country rose in April to 120,000t from no imports in the previous year. Mideast LPG cargoes into China accounted for 90pc of imports in April (LPGW, 17 June, p5).

Ningbo’s PDH plant gets propane cargo



Regulation/Petrochemicals

The UK government last month launched a review of financial markets, focusing on “regulated and unregulated” wholesale markets, in particular where there have been “recent con-cerns about misconduct”.

But the scope of the review is ill-defined and the UK Treasury has yet to clarify whether wholesale energy markets, including energy derivatives and price benchmarks such as for LPG, are within its purview. The review’s terms of refer-ence state that it will consider foreign exchange, currency and commodity markets, “including associated derivatives and benchmarks”.

“It is possible that a number of the review’s recommenda-tions could have applicability across a wider range of whole-sale markets,” according to the document. The government will deliver a report based on the review in 12 months.

Criminality clauseThe Fair and Effective Markets Review is in response to the UK’s opt-out of EU rules that extend the criminal regime for market abuse. Under the EU’s Lisbon treaty, the UK has an opt-in arrangement for legislation relating to justice and home affairs. The UK will expand its own criminal regime for market abuse, rather than adopt the EU laws.

“Our own rules will be as strong or stronger than those of the EU, but will preserve flexibility to reflect specific circum-stances in the UK’s globally important financial sector,” the UK Treasury says.

The market review will make recommendations on issues, such as “tools to strengthen the oversight of market conduct” and “whether the regulatory perimeter for wholesale finan-cial markets should be extended”, as well as considering “reforms in relation to benchmarks, in order to strengthen market infrastructure”.

The UK government plans a consultation period in the autumn on more immediate steps, including “extending the new legislation the government put in place to regulate Libor to cover further benchmarks in the foreign exchange, fixed income and commodity markets”. The benchmark law applied to Libor already includes criminal sanctions for market abuse, but is limited to that benchmark.

The review was launched amid concern over the opera-tion of the foreign exchange and gold markets in London, and following the exposure of manipulation of interbank lending rates, such as Libor. But the terms of reference are broad and non-exclusive. These terms also concede the necessity for co-ordination with global regulatory initiatives.

UK vague on scope of financial market review

The incoming Italian EU presidency aims to achieve agree-ment between member states on benchmark regulation by the end of this year. It has scheduled a first meeting in the week of 14 July, with the working groups on the benchmarks regulation comprising member state experts.

Newly elected members of the European Parliament’s (MEP) economic and monetary affairs committee will meet on 7 July to elect a chairperson and select a draftsperson to draw up amendments to the benchmarks regulation, which was proposed by the European Commission on 18 September last year.

The committee meeting will decide on whether energy and other commodity benchmarks will come within the scope of the legislation, which sets rules for the use and provision of financial benchmarks used as indexes, such as Libor and Euribor. The previous committee failed to agree on whether commodity benchmarks should be included in the regulation.

Former chairperson Sharon Bowles was unable to achieve a compromise on amendments to the regulation. She pointed to scope and the inclusion of energy and other commodities as a “major” issue preventing agreement. UK MEP Bowles did not seek re-election in May’s European parliamentary polls (LPGW, 18 March, p3).

Italy pushes for EU benchmark regulation The European petrochemicals sector remained in a “down-ward spiral” in April, despite resurgent output of the broader chemicals industry, according to the latest monthly Chemicals Trends Report published by the European Chemical Industry Council (Cefic).

Petrochemicals output fell by 0.8pc year on year in April, despite a surge in output of specialty chemicals, which rose by 5.1pc. The month also saw a rise in basic organ-ics production by 2pc. Petrochemicals monthly output has “remained below trend growth rates since September 2011 and is far below its post-crisis peak during first quarter 2011”, the report says.

In contrast, the wider chemicals sector expanded for an eighth consecutive month in April, with output up by 2.8pc in January-April, and capacity utilisation at its highest in three years. But the value of output remained unchanged year on year, as a result of lower prices and despite greater output. Overall chemicals prices fell in April, down by 1.9pc from the previous year, and led by a decline in petrochemi-cals prices by 4.7pc.

“The sector continues to grow, but we are not out of the woods yet,” Cefic director-general Hubert Mandery says. “Energy prices continue to put a strain on commodity chemi-cals, which are more energy-intensive.”

Europe’s petchems output still poor



Oslo-listed very large gas carrier (VLGC) owner Avance Gas recorded a $9.6mn profit in the second quarter of this year, up from $6.1mn in the previous quarter.

The rise partly reflects soaring VLGC freight rates, buoyed by strong US and Middle East export activity. Avance’s average time charter equivalent (TCE) rate — a measure of voyage revenues net of expenses — rose on the quarter

by $10,085/day to $45,084/d — exceed-ing its forecast of $40,000/d. The higher rates boosted TCE earnings by $6.1mn quarter on quarter to $24.5mn. Avance remains bullish over the LPG shipping sector’s third-quarter prospects.

Avance is a joint venture comprising Norway’s Stolt-Nielsen, Saudi Arabia’s Sungas Holdings and Bermuda-based shipowner Frontline 2012.

Shipping and logistics news

US ethylene plant gross margins ¢/lb of ethylene

28 May 4 Jun 11 Jun 18 Jun 25 Jun-30

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Light Naphtha Gasoil

Purvin & Gertz: ethylene plant gross margins (Mont Belvieu, Texas)¢/pound of ethylene

— Argus DeWitt

Ethylene plant gross margins (Mont Belvieu, Texas) ¢/lb of ethylene

NGL economics/Shipping

Ethylene plant total variable cash cost*

28 May 4 Jun 11 Jun 18 Jun 25 Jun

Ethane 15.15 15.32 15.04 15.33 15.14

Propane 20.87 19.47 18.71 21.16 22.15

Butane 19.65 20.65 19.34 21.82 22.66

Light naphtha 41.90 40.47 41.56 44.34 43.23

Gasoil 69.09 66.06 67.99 74.56 73.66

*at Mont Belvieu, Texas — Argus DeWitt

Ethylene plant gross margins* (see graph below)

28 May 4 Jun 11 Jun 18 Jun 25 Jun

Ethane 36.35 38.18 38.21 38.92 38.48

Propane 30.63 34.03 34.54 33.09 31.47

Butane 31.85 32.85 33.91 32.43 30.97

Light naphtha 9.60 13.03 11.69 9.91 10.40

Gasoil -17.59 -12.56 -14.74 -20.31 -20.04

*at Mont Belvieu, Texas — Argus DeWitt

Shipping ratesVery large gas carrier activity rates remain at record levels, although upward price momentum appears to be faltering over the short term, while vessel availability looks to be building. The mid-size and handysize markets were relatively subdued over the sec-ond half of June, with some mid-sized vessel avalability showing east of Suez. The coasters market was quiet.

Shipping rates12-month time charter $/calendar month

78,000m³ 1,800,000

59,000m³ 1,500,000

35,000m³ nc 900,000

5,000m³ pressurised (west) 295,000

3,500m³ pressurised (west) 225,000

3,500m³ pressurised (east) nc 225,000

Shipping ratesSpot $/t

44,000t Mideast Gulf/Japan 130.00

1,800t Tees/ARA 39.00

1,800t Tees/Lisbon 88.00

— Argus/Gibsons



European butane

• Large cargo butane prices continued to edge upwards relative to naphtha, with a cargo changing hands at 85pc of naphtha on a delivered basis. Limited supplies are providing support.

• Delivered coaster values moved up to 87pc of naphtha before easing back to 85pc, as more supplies became available. Steady demand from the petrochemicals sector continues to support prices.

• Algeria’s state-owned Sonatrach increased its butane price for July to $810/t, up by $80/t from June. The steep rise was in line with market expectations, as butane values in the Mediterranean had been rising in the past couple of weeks.

• Storage facilities in north Africa were filled ahead of the Ramadan observance, which began on 28 June. But the usual flurry of pre-Ramadan trade was muted by the legacy of the mild winter leaving storage less depleted than usual.

• Mediterranean fob coaster prices rose sharply, com-pared with prices in northwest Europe.

European propane

• Large cargo cif Amsterdam-Rotterdam-Antwerp (ARA) propane prices hovered in a narrow range throughout the second half of June, moving from a peak of $793/t to a floor of $771/t cif ARA and back again as ample supply coun-tered the bullish influence of surging crude and naphtha.

• The prospect of two very large gas carriers (VLGCs) arriv-ing from the US Gulf to northwest Europe in the first 10 days of July, along with deliveries from Algeria and ample local supply, kept prices under pressure.

• But one of the VLGCs was redirected back to Chile instead of going to Flushing, which eased the oversup-ply. Petrochemicals cracking demand is expected to rise in July.

• Algeria’s state-owned Sonatrach dropped its propane price for July loading at $750/t, or $5/t lower than in June.

• Mediterranean propane prices rose, as the Black Sea looked short of cargoes because of maintenance at Russian refineries and gas processing plants.

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Markets



Asian butane

• State-owned Saudi Aramco increased the monthly Contract Price (CP) for butane to $840/t for July, up by just $5/t from June. The rise reflects steady demand for butane from east Asian buyers.

• Butane demand from trading firms covering requirements from sales to northeast Asian petrochemicals firms in July helped push butane to a premium over propane prices.

• At least two 22,000t butane cargoes on cfr Japan basis changed hands at the July CP plus mid-high-$90s/t.

• Limited supplies of mixed-ratio cargoes for July delivery and strong demand from China and southeast Asia, based on the slew of tenders, helped underpin butane values.

• Pressurised parcels for export from south China for July loading were offered at the July CP plus $68-72/t. But bids were at least $15/t lower.

• Vietnam’s state-owned PV Gas bought a butane-heavy 22,000t for second-half July delivery into Vung Tau.

Asian propane

• State-owned Saudi Aramco lowered the monthly Contract Price (CP) for propane for July to $820/t, largely in line with the market’s expectations and down from $835/t in June.

• Spot trading slowed drastically, as plunging values in the Asian cfr market and rising freight rates muted demand.

• The last fob spot offering from Qatar of a flexible ratio cargo loading in the last 10 days of July remained unsold.

• Kuwait’s state-owned oil firm KPC sold via tender an evenly split 40,000t cargo for 26-27 July loading to a South Korean importer at a $7/t discount to the August CP.

• A European trading firm sold an evenly split 44,000t cargo loading on 25-26 July from Ruwais to another European trad-ing firm at August CP minus $7/t. A European trading firm offered a 44,000t cargo, loading from Ruwais on 28-29 July.

• Taiwan’s Formosa Plastics bought an evenly split 22,000t for 16-31 July delivery into Mailiao at July naphtha cif Japan assessments minus $50/t.

Markets

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Americas propane

• Propane prices at the trading hub in Mont Belvieu, Texas, rose to 109.93¢/USG at the end of June from 103.68¢/USG on 16 June, despite bearish fundamentals that are typically seen during the low-demand summer months.

• Propane’s strength was largely driven by buyers step-ping into the market to secure volumes well ahead of the peak summer demand season.

• Propane prices also remain firm in line with crude prices, which gained upward pressure from geopolitical tensions in the Middle East. Crude values rose after US regula-tors loosened condensate export restrictions (see p1). Propane’s value relative to crude benchmark WTI averaged 42.26pc during the second half of June.

• Conway propane averaged 40.9pc of WTI in June, up from 35.6pc in the previous year. Its value relative to crude in June stood well below the five-year average, at 45.2pc.

• Midcontinent propane narrowed its discount to Mont Belvieu during the month, to trade at parity.

Americas butane and ethane

• Ethane prices at the Mont Belvieu hub were little changed during the second half of June — averaging 28.88¢/USG — with a high of 28.375¢/USG and a low of 29.313¢/USG. Ethane prices averaged 24.18¢/USG in the previous year.

• Ethane prices dipped on 26 June, hitting a low of 28.5¢/USG on the release of the US EIA’s natural gas inventories, which reported a larger-than-expected stockbuild.

• Butane prices rose during the second half of the month to 129¢/USG on 26 June from 125.06¢/USG on 16 June, briefly reaching a high of 130.25¢/USG on 23 June.

• Butane prices rose in line with propane, which is a com-peting feedstock. Butane prices averaged 111.68¢/USG in the second half of June last year.

• Butane found much of its strength from gains in gaso-line prices. Butane’s value relative to gasoline averaged 41.44pc during the second half of last month, with a high of 41.91pc and a low of 40.71.

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Ethane Mont Belvieu ¢/USGEthane Mont Belvieu ¢/USG



INTERNATIONAL LPG

Markets

Naphtha $/tJun 13 Jul Aug Sep Oct Nov Dec Jan 14 Feb Mar Apr May Jun

Cargoes cif NWE 843.76 877.13 913.81 929.98 901.66 929.33 956.20 919.24 914.74 911.81 925.60 937.85 952.45

Cargoes c+f Japan 863.59 893.08 925.82 942.11 918.70 943.03 976.58 945.43 931.75 927.02 939.29 951.09 963.54

Ethane ¢/USGJun 13 Jul Aug Sep Oct Nov Dec Jan 14 Feb Mar Apr May Jun

Mont Belvieu 24.85 24.92 24.98 25.00 25.53 25.07 28.17 33.13 39.06 30.11 29.50 28.82 29.11

Chinese domestic prices yuan/tJun 13 Jul Aug Sep Oct Nov Dec Jan 14 Feb Mar Apr May Jun

East China terminal

Ningbo ex terminal 5,800 5,997 6,036 6,292 6,435 6,750 7,331 6,813 6,733 6,606 6,568 6,409 6,245

Wenzhou ex terminal 5,962 6,048 6,120 6,383 6,481 6,873 7,506 7,208 6,956 6,833 6,673 6,414 6,215

Taicang ex terminal 5,800 5,997 6,036 6,292 6,435 6,729 7,357 6,813 6,733 6,596 6,568 6,436 6,245

Shanghai ex terminal 5,785 5,954 6,065 6,292 6,365 6,829 7,681 7,016 6,738 6,650 6,570 6,437 6,350

Zhangjiagang ex terminal 5,800 5,997 6,036 6,292 6,435 6,745 7,391 6,813 6,733 6,596 6,568 6,409 6,245

Fujian ex terminal 6,250 6,250 6,260 6,350 6,350 6,755 7,536 7,307 7,169 6,950 6,950 6,708 6,550

East China refinery

Shanghai ex refinery 5,563 5,755 5,837 6,117 6,264 6,512 6,999 6,568 6,474 6,429 6,360 6,163 5,995

Zhenhai ex refinery 6,071 6,259 6,298 6,592 6,702 6,967 7,492 7,028 6,936 6,831 6,695 6,524 6,370

Yangzi ex refinery 5,622 5,832 5,932 6,230 6,320 6,532 7,056 6,605 6,506 6,498 6,418 6,249 6,104

Fujian ex refinery 5,860 6,123 6,099 6,359 6,464 6,675 7,225 6,937 6,348 6,488 6,565 6,080 5,982

Gaoqiao ex refinery 5,535 5,740 5,840 6,086 6,274 6,488 6,974 6,556 6,452 6,404 6,341 6,145 5,961

South China terminal

Zhuhai ex terminal 5,938 6,228 6,350 6,482 6,671 7,000 7,661 7,055 6,694 6,663 6,640 6,262 6,193

Shenzhen ex terminal 6,163 6,447 6,541 6,607 6,668 7,186 8,036 7,436 6,850 6,950 6,873 6,601 6,575

Raoping ex terminal 5,913 6,099 6,064 6,305 6,466 6,849 7,539 6,892 6,482 6,523 6,613 6,232 6,179

Nansha ex terminal 6,157 6,458 6,490 6,617 6,672 7,176 7,884 7,244 6,866 6,898 6,792 6,417 6,253

Shantou ex terminal 5,913 6,099 6,064 6,305 6,466 6,849 7,539 6,892 6,482 6,523 6,613 6,232 6,179

Yangjiang ex terminal 5,812 6,174 6,138 6,307 6,610 7,002 7,546 6,955 6,498 6,588 6,497 6,151 6,050

South China refinery

Maoming ex refinery 5,819 6,205 6,143 6,327 6,724 7,021 7,428 6,910 6,491 6,549 6,435 6,084 6,021

Guangzhou ex refinery 5,878 6,198 6,174 6,405 6,577 7,037 7,626 7,054 6,487 6,604 6,575 6,225 6,059

Northeast China refinery

Daqing ex refinery 6,050 6,035 6,005 6,326 6,579 6,655 6,698 6,157 5,994 6,281 6,305 6,324 5,920

Dalian ex refinery 6,113 6,279 6,465 6,728 6,878 6,954 7,108 6,658 6,808 6,957 6,807 6,745 6,335

Northwest China refinery

Urumqi ex refinery 4,468 4,798 5,169 5,230 5,702 5,591 4,900 4,883 4,841 4,955 5,016 4,950 4,726

Inland China refinery

Lanzhou ex refinery 5,284 5,492 5,475 5,475 5,475 5,565 6,001 5,794 5,913 5,820 5,883 5,603 5,375

Yan-An ex refinery 5,104 5,405 5,401 5,741 5,875 6,137 6,592 6,311 5,944 5,920 6,065 5,883 5,463

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2 July 2014Argus LPG World — Prices monthly

PropaneJul 13 Aug Sep Oct Nov Dec Jan 14 Feb Mar Apr May Jun Jul

Middle East $/t

Saudi Arabia 795.00 820.00 850.00 820.00 875.00 1,100.00 1,010.00 970.00 855.00 770.00 810.00 835.00 820.00

Kuwait 795.00 820.00 850.00 820.00 875.00 1,100.00 1,010.00 970.00 855.00 770.00 810.00 835.00 820.00

Mediterranean $/t

Algeria (Sonatrach) 745.00 805.00 840.00 750.00 800.00 1,030.00 910.00 805.00 740.00 755.00 720.00 755.00 750.00

Spot prices $/t

Large cargo cif ARA 818.98 817.14 785.05 804.41 938.48 957.53 853.11 795.43 770.90 766.25 751.65 778.90

Large cargo cif Lavera 807.83 807.43 775.19 803.59 940.07 967.75 855.23 788.50 775.62 781.80 760.75 778.33

Large cargo Japan cfr 870.04 891.35 885.98 892.75 1,040.81 1,055.48 958.41 892.98 861.14 895.19 895.35 911.41

Large cargo east China cfr 870.04 891.35 885.98 892.75 1,040.81 1,055.48 958.41 892.98 861.14 895.19 895.35 911.41

Large cargo south China cfr 870.04 891.35 885.98 892.75 1,040.81 1,055.48 958.41 892.98 861.14 895.19 895.35 911.41

Large cargo far east index 870.04 891.35 885.98 892.75 1,040.81 1,055.48 958.40 892.98 861.14 895.19 895.35 911.40

Asia spot premiums to CP $/t

Mideast Gulf -2.89 -5.75 -2.07 -2.86 6.67 -19.71 -42.33 -38.50 -1.38 3.33 -7.25 -11.05

South China (pressurised) 94.76 79.65 84.05 84.32 91.62 44.19 23.33 30.75 76.81 132.86 112.95 102.48

East China (refrigerated) 70.13 64.75 43.74 62.07 115.48 -27.29 -42.98 -56.18 28.38 119.10 77.70 78.02

South China (refrigerated) 70.13 64.75 43.74 62.07 115.48 -27.29 -42.98 -56.18 28.38 119.10 77.70 78.02

Taiwan 62.17 60.40 63.21 48.93 64.00 17.71 1.79 -6.58 55.71 119.71 72.65 79.07

Japan 62.17 60.40 63.21 48.93 64.00 17.71 1.79 -6.58 55.71 119.71 72.65 79.07

Mont Belvieu ¢/USG

LST 91.99 105.81 110.78 113.34 118.29 127.52 140.14 145.94 106.07 109.87 104.15 104.61

Non-LST 91.97 106.24 110.92 113.41 118.21 127.46 139.85 144.49 106.12 109.92 104.15 104.52

Europe $/t

Coasters fob NWE 752.39 746.19 727.95 808.48 921.10 947.20 834.46 814.80 741.05 728.75 681.30 689.29

Barges fob NWE 764.57 743.10 799.05 821.52 912.50 983.25 837.73 773.00 704.05 715.10 683.75 696.91

Coasters fob Med 805.65 819.67 789.67 806.96 957.71 963.35 861.59 777.50 753.67 772.70 787.55 824.57

ButaneJul 13 Aug Sep Oct Nov Dec Jan 14 Feb Mar Apr May Jun Jul

Middle East $/t

Saudi Arabia 790.00 820.00 875.00 850.00 915.00 1,225.00 1,020.00 970.00 870.00 845.00 825.00 835.00 840.00

Kuwait 790.00 820.00 875.00 850.00 915.00 1,225.00 1,020.00 970.00 870.00 845.00 825.00 835.00 840.00

Mediterranean $/t

Algeria (Sonatrach) 770.00 810.00 872.00 850.00 885.00 1,120.00 1,005.00 870.00 820.00 805.00 730.00 730.00 810.00

Spot prices $/t

Large cargo cif ARA 818.28 857.21 893.74 861.30 932.48 1,004.80 912.07 841.25 822.38 788.25 730.88 791.12

Large cargo cif Lavera 811.13 856.67 874.88 871.96 977.74 1,059.25 940.59 830.50 820.76 787.15 753.15 790.76

Large cargo Japan cfr 871.35 906.30 905.95 921.34 1,131.91 1,113.43 950.86 904.68 906.00 914.19 898.50 917.41

Large cargo east China cfr 871.35 906.30 905.95 921.34 1,131.91 1,113.43 950.86 904.68 906.00 914.19 898.50 917.41

Large cargo south China cfr 871.35 906.30 905.95 921.34 1,131.91 1,113.43 950.86 904.68 906.00 914.19 898.50 917.41

Large cargo far east index 871.35 906.30 905.95 921.34 1,131.90 1,113.43 950.86 904.68 906.00 914.19 898.50 917.40

Asia spot premiums to CP $/t

Mideast Gulf -2.89 -5.15 -2.07 -4.55 6.67 -19.71 -39.71 -34.25 -1.38 3.33 -7.25 -10.81

India cfr 68.94 69.40 33.95 60.75 94.50 -76.24 -66.86 -51.98 41.91 67.19 65.05 75.50

South China (pressurised) 94.76 79.65 84.05 84.32 91.62 44.19 23.33 30.75 76.81 132.62 112.95 102.48

East China (refrigerated) 75.35 74.40 38.95 58.52 150.00 -71.24 -60.05 -46.98 46.81 74.52 69.60 80.50

South China (refrigerated) 75.35 74.40 38.95 58.52 150.00 -71.24 -60.05 -46.98 46.81 74.52 69.60 80.50

Taiwan 64.09 62.40 59.14 46.71 78.95 4.86 -14.43 0.63 67.24 100.57 67.95 79.17

Japan 64.09 62.40 59.14 46.71 78.95 4.86 -14.43 0.63 67.24 100.57 67.95 79.17

Mont Belvieu ¢/USG

LST 124.28 134.43 134.15 146.88 141.32 135.23 146.37 135.47 119.83 123.70 120.99 124.22

Non-LST 127.08 136.63 135.64 148.03 142.81 137.44 149.35 141.59 125.73 126.98 122.72 126.24

Europe $/t

Coasters fob NWE 760.44 794.00 858.24 884.52 950.86 1018.53 922.89 835.90 834.79 717.80 700.25 733.33

Barges fob NWE 779.59 794.91 864.98 902.48 912.43 943.55 825.46 829.55 842.81 762.10 719.05 790.48

Coasters fob Med 759.17 826.43 873.48 916.96 1,035.00 1,137.50 1,052.50 843.65 887.38 838.40 823.95 837.57

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