Viewpoint: Freight headwinds on US LPG trade continue
US exports of LPG will continue to face headwinds throughout the first half of 2023 as shipping delays that stymied spot trading and narrowed netbacks to Asia and Europe during much of the fourth quarter are likely to continue.
Higher freight costs and delays at the Panama Canal curbed buying interest for incremental spot cargoes of LPG out of the US in the fourth quarter, cutting spot terminal fees on the US Gulf coast to an average of 5.3¢/USG during the quarter from 6.2¢/USG a year earlier. This occurred even as the restart of PDH units in China, where Covid-19 precautions had curbed buying interest for propane during the summer, bolstered delivered prices on the Argus Far East Index (AFEI) to $747.25/t on 23 November, the highest since July.
The US shipped 5.22mn t of LPG in November, up from 5.1mn t a year earlier, according to analytics firm Vortexa. The bulk of these shipments went to Japan, China, and South Korea, which together accounted for 44pc of exported volumes, with shipments to Mexico and Sweden accounting for another 7.6pc and 3.9pc, respectively.
As destinations in Asia account for the bulk of US exported volumes, the US market is vulnerable to logistical bottlenecks in transportation to the region. VLGC freight on a Houston-Chiba basis, the bellwether route for shipments between the US and Asia, rose as high as $208/t during the first week of December as delays along the Panama Canal stretched to an estimated 20 days northbound and 23 days southbound that week. Long waiting times at the canal tightened availability for vessels in December and into January, keeping spot freight rates elevated.
While canal delays eased somewhat in mid-December with southbound delays falling to eight days, uncertainty over delivery dates into Asia kept many prospective buyers of US spot cargoes on the sidelines, with mostly term volumes moving even as the propane arbitrage versus the AFEI remained open on paper.
Next year, the delivery of newly built VLGCs could help ease freight costs.
BW LPG, which operates a fleet of 38 VLGCs, many of which it owns, said in November that at least 19 new VLGCs are scheduled to be delivered globally in 2022, with another 45 expected for delivery in 2023 and an additional 12 in 2024. However, at least 60 vessels are scheduled for drydock maintenance in 2023, the company said. In addition, ongoing delays at the Panama Canal, increases in volumes produced out of the US and Middle East and likely slower ship speeds are expected to reduce vessel availability.
The Singapore-based shipowner estimates VLGC loadings out of the US will increase by 5mn t in 2023 to 53mn t. In the Middle East, VLGC shipments are forecast to increase by 2mn t to 37mn t next year.
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Sub-Saharan Africa gets $2.2bn for clean cooking
Sub-Saharan Africa gets $2.2bn for clean cooking
Governments, financial institutions and private-sector firms made a string of funding pledges at this week's IEA summit, write Peter Wilton and Matt Scotland London, 14 May (Argus) — Public and private-sector pledges amounting to $2.2bn to provide access to clean cooking fuels, including LPG, in sub-Saharan Africa by 2030 were announced at the IEA's Summit on Clean Cooking in Africa in Paris on 14 May. Governments, financial institutions and private-sector companies made a string of funding pledges at the event, which attracted heads of state from Norway, Tanzania, Togo and Sierra Leone, as well as 21 ministers. From the public sector, the EU has earmarked €400mn ($432mn) for clean cooking under an existing EU-Africa investment package. Norway's prime minister Jonas Gahr Store added $50mn to this commitment, while French, Danish and UK ministers pledged €100mn, $72mn and £8.5mn ($10.7mn), respectively, under various clean cooking initiatives across the continent to 2030. The US will add a minimum of $40mn in the next two years alone. Private-sector pledges were led by energy firms active in the region, many of which operate in the LPG sector. Trading company Vitol committed $550mn towards infrastructure, LPG cylinders, distribution and cookstoves across the firm's African operations, while Italy's Eni pledged $300mn to lift the number of beneficiaries of its clean cooking programme in Africa from 500,000 to 10mn by 2027 and 20mn by 2030. TotalEnergies will invest $100mn in additional LPG production and associated local distribution in Uganda, and $400mn across Africa and India in developing LPG cooking markets, chief executive Patrick Pouyanne said. LPG is a "pragmatic, existing enabler for access to clean cooking", he said. Africa50 — a financial institution founded by African governments and the African Development Bank (AFDB) to mobilise investment in infrastructure in the continent — pledged $500mn of finance for LPG infrastructure projects, according to chief executive Alain Ebobisse. This is on top of a previous commitment from the AFDB, announced at the UN's Cop 28 climate summit in November, to allocate 20pc of its energy lending budget — worth around $2bn over the next 10 years — to clean cooking. The bank has also urged local governments in Africa to allocate 5pc of their current energy investments to clean cooking, which would raise another $3.5 bn/yr, AFDB president Akinwumi Adesina said. LPG plays a crucial role in the IEA's vision for clean cooking in Africa. Under the Paris-based agency's "access for all" policies scenario, around 45pc of the transition will be to LPG by 2030. The IEA wants to mobilise $4 bn/yr of investment in clean cooking in sub-Saharan Africa, 80pc of which will be for end-user equipment and 20pc for infrastructure, a goal that it says is achievable now. The region can look to emulate successful LPG transitions in Brazil, India, Indonesia and Ghana, Tanzanian president Samia Suluhu Hassan said. IEA executive director Fatih Birol said he hopes the world will look back on the summit "as the turning point" for tackling the problem. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Funding of $2.2bn pledged to clean cooking in Africa
Funding of $2.2bn pledged to clean cooking in Africa
London, 14 May (Argus) — Public and private-sector pledges amounting to $2.2bn in cash, infrastructure investment and finance to provide access to clean cooking fuels, including LPG, in sub-Saharan Africa by 2030 have been announced at the IEA's Summit on Clean Cooking in Africa today. Governments, financial institutions and private-sector companies made a string of funding pledges at the event, which attracted nearly 1,000 delegates from 45 countries, including heads of state from Norway, Tanzania, Togo and Sierra Leone and 21 ministers. From the public sector, the EU has earmarked €400mn ($432mn) for clean cooking under an existing EU-Africa investment package. Norway's prime minister Jonas Gahr Støre added $50mn to this commitment, while French, Danish and UK ministers pledged €100mn, $72mn and £8.5mn ($10.7mn), respectively, under various clean cooking initiatives across the continent to 2030. The US will add a minimum of $40mn in the next two years alone. Private-sector pledges were led by energy firms operating in the region, many of which operate in the LPG sector. Trading company Vitol's chief executive Russell Hardy committed $550mn towards "infrastructure, [LPG] cylinders, distribution and cookstoves" across his firm's African operations, while Italy's Eni pledged $300mn to lift the number of beneficiaries of its clean cooking programme in Africa from 500,000 to 10mn by 2027 and 20mn by 2030. TotalEnergies will invest $100mn in additional LPG production in Uganda and associated local distribution, and $400mn across Africa and India in developing LPG cooking markets, chief executive Patrick Pouyanne said. LPG is a "pragmatic, existing enabler for access to clean cooking," he said. Africa50 — a financial institution founded by African governments and the African Development Bank (AFDB) to mobilise investment in infrastructure in the continent — pledged $500mn of finance for LPG infrastructure projects, according to chief executive Alain Ebobisse. This is on top of a previous commitment from the AFDB, announced at the UN's Cop 28 climate summit in November, to allocate 20pc of its energy lending budget to clean cooking, worth around $2bn over the next 10 years. The bank has also urged local governments in Africa to allocate 5pc of their current energy investments to clean cooking, which would raise another $3.5bn/yr, AFDB president Akinwumi Adesin said. 2030 Vision LPG plays a crucial role in the IEA's vision for clean cooking in Africa. Under the Paris-based agency's "access for all" policies scenario, around 45pc of the transition will be to LPG by 2030. The IEA wants to mobilise $4bn/yr of investment in clean cooking in sub-Saharan Africa, 80pc of which will be for end-user equipment and 20pc on infrastructure, a goal that it says is achievable now. The region can look to emulate successful LPG transitions in Brazil, India, Indonesia and Ghana, Tanzanian president Samia Suluhu Hassan said. The funding pledged at the event is a significant milestone for clean cooking in Africa, given that just $175mn/yr was invested in the region in 2015-19, according to the IEA. The agency organised the summit and encouraged participation as part of its drive to tackle indoor air pollution from cooking with solid biomass fuels. IEA executive director Fatih Birol said he hopes the world will look back on today "as the turning point" for tackling the problem. By Peter Wilton and Matt Scotland Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Rains hamper LPG distribution in south Brazil
Rains hamper LPG distribution in south Brazil
Sao Paulo, 8 May (Argus) — Torrential rains that flooded southern Brazil's Rio Grande do Sul state decreased LPG distribution by 7-10pc in the region in the past week, market participants said. Distributor Copa Energia's operations at its Canoas city unit — which is responsible for 30pc of the LPG distributed in the state — are expected to resume in the coming days after being shut last week. The heavy rains since late April — that have left 100 people dead, 128 people missing and almost 164,000 displaced from their homes, according to the state's civil defense — have spurred companies to take measures to maintain gas supply in the region. Some firms have also advanced salary benefits to help workers deal with the crisis. State-controlled Petrobras' 201,000 b/d Alberto Pasqualini (Refap) refinery has cut LPG production, but has not disclosed by how much . The unit also produces diesel, gasoline and fuel oil, among other products. LPG distribution began normalizing earlier this week, after "the feeling of chaos and lack of information" over the weekend had passed, according to an industry executive. Many retailers are now able to retrieve products, but it is still unknown how many routes have been compromised. But LPG stocks have been able to meet demand so far, preventing any shortages. Hydrocarbons regulator ANP's measure to allow collaborative actions among sector companies without the usual bureaucratic procedures to keep the market supplied has had an immediate effect, according to LPG association Sindigas' chief executive Sergio Bandeira de Mello. Distribution has been carried out collaboratively in recent days, despite some retailers' facilities being underwater, vehicles being lost and roads destroyed. But the state will still face months of problems and precariousness, de Mello said. By Betina Moura Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Flogas opens Teesside LPG terminal
Flogas opens Teesside LPG terminal
London, 1 May (Argus) — UK distributor Flogas Britain has officially opened a new LPG terminal at Teesside in northeast England, which it says will boost the UK's security of supply by absorbing previously exported LPG. Flogas, a subsidiary of Dublin-based DCC Energy, developed the terminal alongside midstream companies North Sea Midstream (NSMP) and Exolum. The facility will use LPG produced at NSMP's Teesside gas processing plant (TGPP) and stored at Exolum's tanks. The terminal will supply around 90,000 t/yr to households and businesses in northern England, Scotland and Wales, Flogas says. Supplies from the facility started in February as part of its commissioning, with maximum capacity projected at 120,000 t/yr — volumes will depend on North Sea production and run rates at TGPP, the company says. The terminal — which is located near renewable DME firm Dimeta's Teesside plant project — can also be a gateway for renewable gases in the future, Flogas says. Around 1.2mn t of LPG was exported from Teesside in 2023, accounting for 40pc of the UK's total. Supplies in the northern UK could become more vulnerable after Petroineos announced the planned closure of its 150,000 b/d Grangemouth refinery in Scotland earlier this year, although a large proportion of its supply was exported. The UK consumed 2.4mn t of LPG in 2023, with demand forecast to rise to nearer 2.5mn t this year and in 2025, Argus Analytics data show. Domestic output stood at 3mn t, of which 1.4mn t came from refineries and 1.6mn t from gas processing. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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