LPG Shipping Market: USA LPG Exports A Major Growth Driver
Over the course of the past few years, many ship owners have invested in the once niche shipping market of LPG carrying vessels. For many of them, this move turned out to be quite lucrative, as demand rose and supply was kept relatively stable. Nowadays, USA LPG exports is becoming a major one. In a recent report, shipbroker Banchero Costa said that “as crude oil and natural gas processing increased with the U.S. shale revolution, the Unites States have rapidly emerged as the world’s largest producer and exporter of liquefied petroleum gas. Having turned into a net exporter of LPG as recently as 2011, the USA now account for 28 percent of all LPG exports by volume. During the whole of 2018, the USA exported 40.7 mln tonnes of LPG, based on Refinitiv vessel tracking data. This put them well ahead of the UAE with 14.7 mln tonnes, Qatar with 12.6 mln tonnes, Saudi Arabia with 12.0 mln tonnes, Algeria with 7.1 mln tonnes, Norway with 6.5 mln tonnes. The main export terminals in the USA are Houston (24.0 mln tonnes in 2018), Freeport (5.6 mln tonnes in 2018), Beaumont (5.5 mln tonnes), Philadelphia (2.2 mln tonnes), Corpus Christi (1.4 mln tonnes)”.
According to Banchero Costa, “the positive trend continues also this year. In the first 11 months of 2019, based on Refinitiv data, the US exported 43.9 mln tonnes of LPG (excluding petrochemicals). This was an increase of +18.3 percent year-on-year, or 6.8 mln tonnes more than in the same timeline last year. Things have really accelerated in the second quarter. American monthly exports of LPG built up from 2.9 mln tonnes in February to a record 4.5 mln tonnes in July. Whilst 1Q2019 saw just a +9.5% increase year-on-year, with 10.1 mln tonnes, 2Q2019 recorded a +28 percent jump year on year, with 12.6 mln tonnes. The third quarter again saw 12.7 mln tonnes, up +16.0 percent year-on-year. LPG production and exports from the US are driving shifts to the global trade patterns – incremental US exports have moved to Asia. When the trade war between the US and China escalated last year, the flows of trade has also shifted as a consequence. In the first 11 months of 2019, the USA exported just 0.2 mln tonnes of LPG to China. This was down -67.5 percent year-on-year from 2018, i.e. 1 mln tonnes less than in the same span last year. More notably, it was an – 83.4 percent contraction from the same period of 2017”.
Singapore company steps in to wriggle govt out of gas crisis
Amid the heightened gas crisis in the country, world class Singapore based company Trafigura has wished to step in and wriggle the government out of this morass by supplying the LNG saying it is in deal with Universal Gas Distribution Company (UGDC) under third part access rules (TPA). Trafigura is the world’s second largest private oil trader after Vitol and the world’s largest private metals trader. In a letter addressed to the Secretary, Energy (Petroleum Division, written on December 28 of which copy is available with The News, Trafigura requested the top man of Petroleum Division to advise all concerned companies to finalize TPA agreement with PGPL terminal operator on high priority enabling the company to deliver LNG molecule to UGDC, which will distribute the RLNG in CNG sector.
Trafigura says that it is the owner of private re-gas capacity in the Port Gas Pakistan Consortium Limited (PGPL) terminal and is in a position to supply LNG as soon as the third party access agreement is executed with government owned (Pakistan LNG Terminal Limited) PLTL for early utilisation of private capacity. In the letter, the Singapore based company while mentioning that the country is facing shortage of gas due to severe weather specifically in northern part of the country, the gas for CNG has been diverted to domestic sector resulting into the closure of CNG stations, and the company is in position to cater to the needs of the CNG sector. The letter also mentioned the fact the Trafigura has completed arrangement with Universal Gas Distribution Company (UGDCL) and offered to deliver LNG DES basis at Port of Ben Qasim, either during the first or second week of January 2020 ensuring the ease to the government from the gas crisis. In case private sector gas company, Universal Gas Distribution Company (UGDC), which is in agreement with Trafigura for LNG supply, top official at Petroleum Division said, is allowed to bring an LNG ship of 130,000 cubic meters and provide its product to CNG satiations at comparatively cheaper rates owing to which the CNG prices will tumble more by Rs6-8 per litre. ‘ This would be the massive solace to the CNG consumers, and it will also end monopoly of gas companies –Sui Southern and Sui Northern.’ It is pertinent to mention that Federal Minister for Energy Mr Omar Ayub Khan, while chairing the meeting of all stakeholders has already taken a major policy decision allowing UGDC to import its first ever LNG cargo under TPA (third party access) rules. Adviser to Prime Minister Babar Nadeem has also time and gain assured support for private sector to enter into LNG supply and distribution business in the country saying that the CNG price in Punjab that is 20 per cent lower than the petrol price would also go down by 30 per cent. The UGDC Company, the official said, is also in the process of finalising the agreement with Textile Industry for provision of RLNG, but in the first phase his company will provide RLNG to CNG sector. ‘There are 1,037 CNG stations in Punjab and with supply of RLNG to CNG stations from UGDC, the CNG prices will further go down by Rs6-8 per litre and in the months to come, and with the usage of fuel injected kits (which will also be introduced) in the vehicles, the fuel efficiency of vehicles will increase and the saving of consumers will soar to 40-50 per cent when it will be compared with petrol prices.’