The need for energy resilience and flexible fuels in more volatile times provides the LPG industry with a huge opportunity
The IEA's proposal for a global LPG reserve mechanism could create the strongest case yet for expanding storage infrastructure worldwide.
IEA executive director Fatih Birol and Turkish energy minister Alparslan Bayraktar told delegates at the World Liquid Gas Association's (WLGA) Liquid Gas Week in Istanbul on 14 October that LPG needs to be at the centre of the global energy security conversation. The agency is working with governments and the industry on developing an LPG security mechanism, and could unveil a new policy paper at the next summit on clean cooking in Africa in Nairobi, Kenya, on 27-28 January.
For an industry that has long made the case of LPG's value as a clean and easily transportable fuel for cooking in the developing world, backed by a global supply chain, this high-level emphasis on the need for protection from supply shocks amid the Iran war signifies how far LPG has come under the clean cooking movement.
The world is "facing the largest energy security threat in history... with more than one-third of LPG trade passing through the strait of Hormuz, mainly to Asia", Birol said. Noting more than half of all LPG is used in homes for cooking and heating, he added: "The current energy crisis is directly affecting the heart of daily life."
Energy security is also a matter of national security, Bayraktar told the audience. "We cannot afford to depend on a single energy resource, a single supplier," he added, nor on any one technology or transport route. That "is precisely why LPG deserves greater attention". LPG "is sometimes a little bit overshadowed by its big brothers, natural gas and oil, but its contribution to energy security should not be underestimated", Bayraktar added. "With its flexibility, portability and accessibility, LPG provides an important alternative for millions of consumers, particularly in times of supply disruptions."
Turkey has a large LPG market, as the world's second-largest autogas consumer. This means that industry must seek to "strengthen supply chain resilience through diversified sources, reliable infrastructure and stronger international co-operation", he said — something an emergency reserve scheme could help deliver.
The need for compact and portable energy such as LPG is increasing despite the electrification drive, Turkish distributor Aygaz's chief executive Melih Poyraz said. "LPG is needed to keep energy flowing when other systems fail," he said.
The need for energy resilience and flexible fuels in more volatile times provides the LPG industry with a huge opportunity, distributor DCC chief executive and WLGA president Donal Murphy said. But this opportunity requires substantial investment — in tanks, terminals and caverns. Japan as a key LPG importer has proven it is possible, with emergency reserves of around 2.5mn t, or 90 days worth of imports. India has possibly been the worst affected by the Mideast Gulf war given its limited reserves, prompting the government to ask state-run refiners to build at least 30 days of stockpiles. India is planning to build more storage capacity, while Rwanda and Vietnam are increasing strategic stocks.
An IEA framework would give investors the confidence to back new storage projects. Supply is not a concern, with millions more tonnes of LPG expected to flow from the US, as well as more from the Middle East, Argentina and Canada.
The easiest solution
Greater storage capacity and emergency reserves will be essential to the expansion of clean cooking across Africa. LPG is "the easiest solution today" for Africa's clean cooking transition, Birol said, and the infrastructure developed under a reserve scheme would help bring LPG to millions more homes in the region.
The clearest signal from the conference was that governments, the IEA and industry are now pulling in the same direction when it comes to LPG supply resilience. What matters now is whether the money follows.
