Dimeta pushes ahead with renewable DME projects
Major LPG distributors SHV Energy and UGI International's renewable dimethyl ether (DME) joint venture, Dimeta, is on a mission to quickly ramp up production of the renewable gas. It plans to open its first 50,000 t/yr plant at Teesworks in Teesside, northeast England, by 2024, and another five plants, bringing total output to 300,000 t/yr across Europe and the US, by 2027. By using a "feedstock neutral" technology that allows it to process multiple waste sources, the company believes renewable DME can be "right now". Argus' Waldemar Jaszczyk spoke with Dimeta advocacy manager Sophia Haywood about the company's projects and future plans:
Can you provide an update on your Teesside plant project?
Significant progress has been made since the announcement of our plant location at Teesside, UK, in May. The first phase of detailed engineering design work is now complete as planned, we are in deep discussions with feedstock providers, and we have entered the next phase of engineering works where we will appoint [a final engineering contract] ahead of financial close.
Through our Circular Fuels venture with Kew Technology, we have also joined the Net Zero Teesside Cluster Plan, which is part of the UK Department for Business, Energy and Industrial Strategy's Industrial Decarbonisation Challenge and is managed by Innovate UK. Circular Fuels is an important contributor to this work providing a roadmap to net zero.
Have you secured all the necessary permits and approvals for the plant?
Teesside has a proud industrial heritage, with strong public and political support for these industries, which makes it a prime location to have the first renewable and recycled carbon DME plant in the UK. We are securing planning and permitting approvals, and have received positive feedback throughout the process owing to the strong alignment between our project and the region's net zero vision.
Have you signed any contracts with LPG retailers to sell your renewable DME?
Since the establishment of Dimeta, we have seen a consistently growing interest in renewable and recycled carbon DME from the LPG industry. We are seeing more and more players reaching out to us to discuss supply opportunities for the UK, but also in Europe, the US and beyond. While we can't share commercial information, all the discussions are in progress.
Has the commitment to offer 20pc of the product produced at Teesside to third parties changed?
No, the commitment remains — it is a fundamental aspect of the establishment of Dimeta that the benefit of renewable and recycled DME needs to be realised by the entirety of the LPG industry.
What will be the approximate cost of the Teesside plant project?
The total investment to deliver the facility at Teesside is in the region of £150mn ($185mn). It will create 250 jobs in construction and 50 jobs during operation, providing a boost to the local economy.
In Dimeta's presentation for LPG association Liquid Gas UK's recent Edinburgh conference, your colleague Steven Hallett said that your second commercial-scale production facility would be located in France. Can you confirm this? And if so, what made you choose France and when will you announce the site?
We are currently exploring locations in Europe. There is a considerable LPG market in France with strong decarbonisation objectives — not to mention significant quantities of waste feedstock available for utilisation — making it an attractive geography. We expect to announce the site location in 2023.
Can you tell us some more about Dimeta's plans in the US? That is a potentially huge marketplace.
Propane is the third-most used energy source for homes and businesses in the US, supporting at least 50mn homes and 1.1mn businesses — it is a huge market and there is a significant opportunity for renewable and recycled carbon DME to be blended with propane, helping the sector reduce its emissions as it transitions to net zero. We are developing opportunities in the US and will be announcing these initiatives next year.
Are you looking at the same type of feedstock for future plants or will you use different types?
Dimeta is feedstock neutral when producing renewable and recycled DME. While we are using waste feedstock for our first plant in Teesside, and upcoming plants in Europe and the US are expected to use waste, we are also exploring opportunities with different feedstocks and processes. In addition, technologies at an earlier phase of development, such as power-to-X, could also be of interest for Dimeta further down the line utilising feedstock such as hydrogen and CO2.
What were the reasons behind Dimeta's recent decision to collaborate with the renewable methanol and ethanol producer Enerkem?
In October 2022, we entered into a collaboration with Enerkem, one of the players with the most extensive expertise in waste gasification for producing molecules such as methanol and ethanol. We are working with them in addition to our projects with Circular Fuels. The collaboration is focused on exploring the opportunity for the development of renewable and recycled carbon DME plants in Europe and the US at a larger scale, such as 150,000 t/yr, and with a strong focus on maximising CO2 recycling.
Does this larger capacity refer to the next five 50,000 t/yr plants planned by 2027 or future projects?
Dimeta has an overarching goal of producing 300,000t of renewable and recycled DME a year by 2027. Our first partnership with Kew Technology to create Circular Fuels is one route to delivering this — the plants we develop here are modular, so they can be scaled up or down. These plants are then complemented by additional partnerships, such as our recent arrangement with Enerkem. The size of our upcoming plants is not public yet, but it is ultimately dependent on commercial and market drivers. The important milestone is reaching 300,000t by 2027, so the combination of technology and partners will depend on relative project economics and the speed of development.
Are there any other partnerships you are pursuing with other companies for future developments?
Dimeta is looking to establish more partnerships to deliver a net zero future for the LPG industry, through renewable and recycled carbon DME. Our partnerships with Kew Technology to create Circular Fuels, and now with Enerkem demonstrate that we are looking for collaboration across the whole value chain, from innovative technologies for DME production, to integrating DME into the LPG supply chain, or financing investments in DME infrastructure, for example. You can expect to hear more about our new partnerships in the coming months.
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Japan’s Mol starts operating LPG-fuelled VLGC
Japan’s Mol starts operating LPG-fuelled VLGC
Tokyo, 26 April (Argus) — Japanese shipping firm Mitsui OSK Line's (Mol) Singapore-based subsidiary Aramo Shipping started operating today a new LPG-fuelled LPG and ammonia carrier for domestic importer Gyxis. The 87,119m³ very large gas carrier (VLGC) Aquamarine Progress 2 was built by Japanese shipbuilder Namura Shipbuilding at Namura's Imari shipyard in south Japan's Saga prefecture. The vessel is equipped with a dual-fuel engine, which can burn LPG and conventional marine fuel. Mol expects use of LPG to reduce carbon dioxide (CO2) and nitrogen oxide emissions by 20pc and sulphur oxide and particulate matter emissions by 90pc compared with a heavy oil-dedicated vessel. The VLGC is also designed to be able to carry ammonia, eyeing potential demand growth for decarbonisation. Japanese shipping firms and shipbuilders have boosted construction of LPG carriers that can also ship ammonia, as demand for the cleaner fuel is expected to increase in future. Japan plans to co-fire ammonia at coal-fired power plants to reduce CO2 emissions, while aiming to use ammonia as a hydrogen carrier. Shipbuilders Kawasaki Heavy Industries and Mitsubishi Heavy Industries each delivered a VLGC, which can carry LPG and liquefied ammonia. Mol, in partnership with shipbuilders Tsuneishi Shipbuilding and Mitsui E&S Shipbuilding, completed risk assessments to design a mid-size ammonia-fuelled ammonia and LPG carrier , targeting to finish construction by 2026. By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Romania's growing autogas market boosts 2023 imports
Romania's growing autogas market boosts 2023 imports
Demand for autogas is expected to continue rising in the country as it maintains a discount to competing motor fuels Moscow, 16 April (Argus) — Romania's autogas consumption increased last year as more drivers were attracted by its lower price compared with gasoline and diesel, helping to lift imports to the country by over a quarter on the year. Autogas sales in the country rose by 10,000-30,000t on the year to 270,000-300,000t as a result of its lower price against other motor fuels. "The ratio of autogas to gasoline prices fell below 50pc last year from 60-65pc owing to rising global gasoline and diesel prices," a Romanian trader says. Romanian autogas prices stood at 3.27-3.35 lei/litre (71-73¢/l) last week, while gasoline prices were Lei7.12-7.15/l ($1.50/l), putting the former at 47pc of the latter . This compares with autogas' cost of Lei3.91-3.98/l in April 2023, and gasoline at Lei6.63-6.69/l, with a ratio of 59-60pc. The country's autogas demand could have been even stronger last year had it not been for a fire at the Flagas refuelling station in Crevedia, near Bucharest, in August. Immediately after the accident, a special commission consisting of firefighters, police, an environmental body and tax authorities was formed to carry out inspections at the country's autogas stations, resulting in many being closed. "The commission would close a fuelling station for a slightest non-compliance, so some retail operators shut down their fuelling stations before it arrived," a market participant says. Romania has more than 1,000 autogas refuelling sites. But around 300 stations are reported to have closed since September 2023 following the incident. This resulted in sales dropping in September-December last year compared with the same period in 2022, according to local market participants. The growth in autogas sales over the whole of last year boosted Romania's LPG imports to around 353,000t compared with 278,000t in 2022, Vortexa data show. All of the country's LPG deliveries were to its sea ports of Midia, Mangalia and Galati, as rail shipments from Russia transiting Ukraine, which had been 2,000-3,000 t/month, halted after the war in Ukraine began in late February 2022. Imports were also supported by cuts to domestic output and an increase in overland exports. Exports rose by about 5,000–10,000t to 330,000–340,000t in 2023, according to market participants, with most of this supported by rising shipments to Ukraine, growing by 45,600t to 235,600t. Romania's LPG imports from Egypt doubled to 104,200t, Vortexa data show, with most of this supplied by trading firms Naftomar and Evicor. Arrivals from Turkey grew by 51,300t to 69,600t, mostly delivered by Turkish distributors Aygaz and Milangaz. More Kazakh LPG arrived from Georgia's Batumi port, rising by 14,800t to 27,600t, to partially offset the loss of supply from Russia's Taman terminal after exports halted in May 2023. LPG arrivals from Algeria and the US also increased last year (see table). Gassing up Romania's autogas demand should be on course to continue expanding this year, with autogas prices at around an 80¢/l discount to gasoline at the beginning of April. The government raised autogas excise duty again from 1 January, to around Lei874/t ($191/t). But it also increased the duty on gasoline to Lei2.02/l and on diesel to Lei1.85/l, and will do so again from 1 July to Lei2.38/l and Lei2.18/l, respectively, while the rate on autogas is expected to remain unchanged. Autogas sales in the country are expected to increase to 280,000-320,000t this year from 270,000-300,000t in 2023 because of lower excise tax on LPG compared with gasoline and diesel, according to traders. Exports should stabilise while domestic output will increase as technical issues at the Rompetrol refinery are resolved, they say. Seaborne LPG imports to Romania '000t 2023 ±% 2022 Egypt 104.2 99.5 Turkey 69.5 35.7 Russia/Kazakhstan 54.5 -163.0 Georgia 27.6 86.8 US 27.1 49.0 Algeria 26.9 50.2 Tunisia 12.0 11.1 Greece 6.3 -235.4 Croatia 5.7 -456.2 Italy 3.7 183.2 Netherlands 3.4 247.4 Libya 1.1 -283.3 Other 11.6 11.6 Total 353.5 30.8 — Vortexa Romania LPG demand by sector 2022 Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
LPG World editorial: That time of year?
LPG World editorial: That time of year?
Increased US LPG supply is changing global markets, having a dampening effect on traditional seasonal price fluctuations, writes Peter Wilton London, 16 April (Argus) — As the northern hemisphere winter disappears into the rear-view mirror, the lack of seasonality in LPG prices in the key trading hubs of northwest Europe and northeast Asia has been striking. In Europe, large cargo prices for propane delivered into Amsterdam-Rotterdam-Antwerp (ARA) held steady through winter at around 50pc of prices for regional benchmark Brent crude. In Asia, Argus Far East Index (AFEI) propane assessments, the benchmark for large cargoes sold to Japan, South Korea and China, lost some ground against crude, slipping to below 60pc of Dubai crude futures this month from around 70pc in late December. This appears to be another sign of how ample US supply, courtesy of the country's shale revolution, has changed global markets. Now, the US can not only provide volumes when net-short regions require them — it can seemingly leave the export taps open regardless of needs elsewhere, severely dampening seasonality in seaborne cargo markets in the process. Is the influence of robust US export volumes now so great that seasonal fluctuations in the crucial residential and commercial sectors — estimated to account for 45pc of global LPG demand this year — have little effect on spot prices? A cursory glance at the 2022-23 northern hemisphere winter would suggest not, and that the 2023-24 winter was perhaps an aberration, given how prices spiked in January 2023. In the second half of that month, cif ARA propane gained 12 percentage points against Brent crude, while AFEI surged by 15 percentage points against Dubai crude — a classic winter bull run. But this was not driven by heating demand. The trigger was a perfect storm of supporting factors in the key Chinese market, including a concertina effect on demand — following disruption caused by December 2022's post-Covid reopening of its economy and the late January 2023 lunar new year holiday — that effectively squeezed many weeks of buying for its propane dehydrogenation (PDH) plants into that early January period. Stripping out that spike, 2022-23 winter pricing patterns look much less seasonal. Following the surge in prices, average monthly cif ARA assessments were rangebound for a full year at 45-55pc of Brent, with AFEI in a similarly tight 53-67pc range. Much greater price variance used to be the norm in winter, when seaborne propane prices would react inversely to falling temperatures. Seasonal disruption Growing US supplies supported by strong domestic natural gas prices look likely to remain the dominant influence. But several smaller demand-side factors could also further inhibit seasonality. Firstly, heating demand's vulnerability to decarbonisation from alternative renewable liquid gases. The idea of renewable feedstocks reaching steam crackers or PDH units in any great volume is, for now, largely an aspirational environmental goal — usage of and investment in bioLPG production by petrochemical companies is modest at best. The firms that are either significant buyers of bioLPG or launching renewable liquid gas projects are LPG distributors such as SHV Energy and UGI International. Secondly, if current policy support for expanding LPG cooking schemes to help tackle energy poverty in developing economies genuinely bears fruit in the coming decades, this non-seasonal demand will soak up much more supply from the US and elsewhere than traditional, temperature-dependent markets, and hence become more influential on prices. Thirdly, as the IEA has noted, the most recent Cop climate pledges fall far short of what is needed to meet the Paris Agreement's 1.5°C ceiling for global temperature rises above pre-industrial levels. And a warmer planet will mean lower demand for fuels, clean or otherwise, for space heating. AFEI % of Dubai crude in heating season Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
India's Modi exploits energy to boost poll support
India's Modi exploits energy to boost poll support
Short-term support for key election constituencies could weigh on longer-term energy policy priorities, writes Rituparna Ghosh Mumbai, 12 April (Argus) — Energy issues are taking a starring role in India's forthcoming election, less because of what is at stake in terms of long-term policy and more because of how the government of prime minister Narendra Modi is using voter-friendly initiatives to try and secure the support of key parts of the electorate. India's federal elections are set to take place over the next two months, and Modi's BJP party holds a comfortable poll lead over a largely disorganised opposition — a lead they hope will translate into an absolute majority for a third consecutive term. But Modi's government is looking to consolidate that support through a number of measures that embrace both traditional and cleaner energy sources. The government has cut retail gasoline and diesel prices after a two-year freeze, and expanded subsidies for LPG — a key cooking fuel for many Indian households. At the same time, it has subsidised ethanol production, providing a boost to Indian farmers, and launched a $9bn programme to promote rooftop solar power. The 2 rupees/litre ($3.80/bl) cut in fuel pump prices is the most eye-catching move so far, and the most blatant pre-election bribe — it was unveiled just two days before India's election rules prevented the government from making any further new policy announcements. These measures may help Modi secure a third term, but they could also create problems for his next administration in areas of energy security, foreign investment and energy transition. Freezing over The two-year fuel price freeze that preceded the recent cut was the longest in India's history, suspending previous reforms that allowed prices to fluctuate in line with movements in global oil markets. Price controls on diesel and gasoline had been lifted in October 2014, but the government has frequently interfered with pump prices — especially prior to state and federal polls — through the country's state-controlled oil marketing companies — state-run firms, led by Indian Oil, control 90pc of India's fuel market. The two-year freeze began in May 2022, when international crude prices reached $120/bl following Russia's invasion of Ukraine three months earlier, sending Indian pump prices to record highs. Modi's government has also played some other familiar vote-winning cards. LPG subsidies have long been exploited by Indian politicians to win favour with voters, and the BJP increased these subsidies by more than fivefold in its 2023-24 budget — to $1.5bn from $273mn — to boost access to LPG and reduce cooking gas prices for poorer households. Around 322mn Indian households use LPG, but domestic consumption has plateaued at around 28mn t/yr in recent years. LPG subsidies have been maintained at $1.5bn in the 2024-25 budget. The extra funds announced last month enabled the government to extend by one year, to April 2025, a Rs300 ($3.60) LPG cylinder subsidy for poor households, in addition to implementing a general Rs100 price cut for a 14.2kg LPG cylinder to Rs503. Access to LPG has already been vastly expanded by Modi's Pradhan Mantri Ujjwala Yojana programme for women in poorer households, launched during his first term in 2015. The scheme has enabled 100mn poor, rural households to secure access to LPG, helping them switch away from harmful biomass such as wood and reducing the incidence of respiratory disease among rural women. The LPG subsidies are aimed at the rural poor, but Modi's government is framing its enthusiastic support for ethanol and biofuels to woo a different constituency — farmers in the politically powerful states of Uttar Pradesh, Maharashtra and Karnataka. New Delhi is promoting ethanol for blending with gasoline and has set a 20pc blending target by 2025. This move could improve India's energy security and trade balance by reducing its dependence on imported crude, which meets around 88pc of its crude needs. The government estimates it saved $2.7bn by blending ethanol into gasoline in 2021-22, and blending in the three months to January 2024 reached 11pc. But more importantly, particularly with an election looming, biofuels are additional sources of revenue for both farmers and distillers. Ethanol in India is derived primarily from sugar cane, which makes it politically sensitive. India's sugar cane industry is the second-largest in the world after Brazil, and sugar cane farmers are an important voting block — Uttar Pradesh and Maharashtra are the biggest producing states and played a major role in Modi's re-election in 2019. Farmers in these states previously faced regular late payments from sugar distillers, to the tune of hundreds of millions of dollars outstanding. But the additional income that sugar mills now generate from ethanol has allowed them to catch up on these arrears, oil minister Hardeep Puri says. The government has also promoted solar power to households, under a $9bn rooftop solar plan that aims to install solar panels in 10mn households. New Delhi is offering a 60pc subsidy on the entire system cost, with loans available to cover the balance. The proposed scheme may add 30GW of solar power capacity through residential rooftop solar panels, an area where India has lagged behind. Longer-term costs The current focus on voter-friendly energy policies comes at a cost. Longer-term objectives relating to energy security — specifically strategic petroleum storage — energy transition and foreign investment have received less attention. Budget allocations to state-run oil companies for energy transition investments have been halved in the current fiscal year, to $1.8bn, and actual disbursement of these funds has been postponed until the 2024-25 fiscal year. The government in November scrapped its plans to buy $603mn of crude to fill its strategic underground storage, after providing for such outlays in the 2023-24 budget, and it has not made any allocation for refilling strategic stocks in its 2024-25 budget. New Delhi is also facing delays in building the 6.5mn t second phase of its strategic petroleum reserve, owing to challenges with funding and the potential role of foreign partners. It initially wanted to build the reserve on its own but subsequently sought third parties to help with funding. It has now invited bids to build India's first commercial strategic storage, comprising 2.5mn t of underground storage at Padur in Karnataka at a cost of $700mn, with state-controlled Saudi Aramco and the UAE's state-owned Adnoc. Discussions begin this week. India will need to resolve and make progress on these issues, given its aspiration to join Paris-based energy watchdog the IEA, whose rules stipulate that members must hold strategic oil stocks equivalent to 90 days of net imports. The Indian reserve's first phase offers 5.33mn t of storage capacity across three sites, equivalent to only seven days of crude demand, government documents indicate. On foreign investment, India's demand potential is helping attract investors to green energy, to the tune of $6bn over April 2020-September 2023, power minister RK Singh told the Indian parliament in December. But the country's chronic inability to lure investors into oil and gas remains a problem, particularly in light of Modi's ambitions of making India an economic superpower to rival China. Foreign investment in India's oil and gas sector reached a record $806mn in 2019-20, before the Covid-19 pandemic, oil ministry data show. But it plunged to just $56mn in 2021-22 and to $108mn in 2022-23, representing a nugatory 0.2pc of total foreign direct investment flows into the country. Foreign investment in exploration totalled just $16mn in 2022-23, while investment in refining was nil. Indian ethanol blending FDI in Indian oil and gas Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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