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Viewpoint: US LPG exports to LatAm poised to grow
Viewpoint: US LPG exports to LatAm poised to grow
Houston, 30 December (Argus) — US LPG exports to Latin America are expected to rise in 2025 because of ongoing efforts by governments to transition low-income residences away from cooking with firewood. The International Energy Agency (IEA) estimates in 2023 more than 70mn consumers across Latin America lacked access to clean cooking fuel. Industry groups promote the use of LPG as an alternative to firewood owing it its lower emissions and ease of transport into remote regions unable to be served by electricity or natural gas. Much of the LPG consumed in Latin America is imported from the US, and US exports to the region stood at around 10.6mn metric tonnes (t) from January to mid-December 2024, already surpassing the 10.48mn t shipped from the US in 2023, according to data from commodity tracking firm Vortexa. The largest demand center for US LPG in Latin America was Mexico, accounting for 35pc of US shipments to the region, down by 2.2 percentage points from 2023. The Dominican Republic accounted for 12pc of shipments, Ecuador 11pc, and Chile took 9pc. Brazil was among countries seeing the largest increase in its share of US LPG supplies, rising by 2.6 percentage points to 8.7pc this year. The Brazilian government is working to expand subsidies for LPG, also known as cooking fuel, by another 20mn low-income households next year. If the bill is passed, the measure could increase Brazil's LPG consumption from 7.6mn t to 7.7mn t next year. An estimated 5.4mn households currently benefit from the existing LPG subsidy program. LPG restrictions in Brazil — which limit the use of LPG in saunas, pool heating, commercial boilers, and as autogas in vehicles — may soon change, under a measure under consideration by Brazil's hydrocarbons regulator, ANP . Brazilian LPG association Sindigas expects a 5pc boost to LPG demand in the next five years if restrictions on commercial uses are lifted. The prospect of additional LPG demand in Brazil has already spurred investments in new infrastructure, including two new import and distribution terminals. Brazilian LPG distributor Copa Energia is part of a consortium of companies investing in a new 71,000t LPG storage facility in Suape on the country's northeast coast. Brazilian fuel distributor Ultrapar has also applied to antitrust regulators to build a new LPG terminal in Pecem port, in northeastern Ceara state, with 62,000t of storage, tentatively planned for operations in 2028. In Colombia, LPG import are also forecast to grow, largely due to its own diminishing production at Ecopetrol's Cusiana and Cupiagua fields. Colombia's LPG imports are forecast to increase to an average of 22,000 t/month in 2025, based on demand growth of 0.6pc per year, up from the average 6,900 t/month imported in January-June, Gasnova president Alejandro Martinez told Argus earlier this year. Colombia, like neighboring Brazil, is gearing up to accommodate growing demand. LPG distributor Colgas has started building a terminal at the existing 16,000 t/month Okianus port in Cartagena, scheduled to be ready in late 2025. Canadian oil company Frontera and Chilean LPG supplier Gasco plan to build a $50mn-$60mn LPG terminal at the Caribbean port of Puerto Bahia, which will include 20,400t of storage capacity and will be able to offload two very large gas carriers (VLGCs) a month. In Guatemala, Mexico's Grupo Tomza subsidiary Tropigas opened a new 1.3mn USG (31,000 bl) LPG storage and distribution facility in Escuintla in November to accommodate growing demand in the region and mitigate logistical disruptions. The Planta Palin facility in Escuintla comprises 20 storage tanks for propane and butane, and will be supplied from seaborne shipments arriving at Guatemala's Santo Tomas and Honduras' Omoa ports. Latin American LPG importers may also benefit from expanding dock capacity in the US. Both Enterprise and Energy Transfer projects are expected to add a combined 550,000 b/d of LPG export capacity out of Houston and Nederland, Texas, by the end of 2026. Enterprise's new Neches River terminal project near Beaumont, Texas, will add another 360,000 b/d of either ethane or propane export capacity. The US projects will ease tight dock capacity and the premiums for spot cargoes of propane and butane at the US Gulf coast are expected to wane by the end of 2025, incentivizing buyers in Latin America to purchase more US sourced LPG supplies. The curve ball Yet US LPG exports to Latin America could be stymied by growing supplies from Argentina, home to the prolific Vaca Muerta shale formation that holds an estimated 308 trillion cf of shale gas. Natural gas production in Argentina increased to 138mn m³/d in October, up from 130mn m³/d a year earlier, according to the latest Argentinian government data. Argentina exported 591,000t of LPG from January to mid-December, with nearly 85pc of it routed to Brazil. But Argentina also exports LPG to Brazil by tanker truck, which could also weigh on seaborne arrivals. By Giovann Rosales Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Viewpoint: US ethane to be oversupplied for 2025
Viewpoint: US ethane to be oversupplied for 2025
Houston, 24 December (Argus) — US ethane production growth will likely continue to outpace exports and domestic demand into the first half of 2025, keeping US inventories of the natural gas liquid in record territory until export capacity expands late next year. Ethane, which is widely used for ethylene production at US steam crackers, has emerged as the lowest-cost petrochemical feedstock worldwide, spurring infrastructure investments in Asia, particularly China, to receive US ethane exports. Still, US ethane production from gas processing continues to outpace the country's ability to ship it into demand centers in Europe, India and China. Mont Belvieu, Texas, EPC ethane spot prices fell relative to natural gas in 2024 due to record ethane production, leaving ethane stocks oversupplied entering 2025. EPC ethane's premium to its fuel value in Nymex natural gas at the Henry Hub averaged 3.25¢/USG during 2024, 54pc lower than in 2023. It also averaged a 1.75¢/USG premium to its fuel content in the second half of 2024, 77.5pc lower than the same period last year, as spot ethane prices fell on ample supplies. Cheaper natural gas in the Permian basin spurred higher rates of ethane recovery from the natural gas stream and led to a disproportionate rise in ethane production. Spot prices for natural gas at the Waha hub in west Texas across the year averaged -$0.10/mmBtu, with prices remaining negative for eight of nine months from March-November. Prices were consistently positive in 2023, averaging $1.66/mmBtu across the year. Negative Permian gas prices allow ethane recovery from the gas stream at a much lower cost. US natural gas production in 2024 is poised to be steady to slightly down, having averaged 3.14tcf in monthly production from January to September, according to US Energy Information Administration (EIA) data. Meanwhile, ethane production is set to reach a record high for the 11th consecutive year, with monthly production averaging 2.78mn b/d over the same period, up from a 2.65mn b/d average over the whole of 2023. Waha gas prices turned positive in the second half of November and spiked to a multi-month high of $2.56/mmBtu on 2 December, pushing ethane prices to a 13-month high of 25.625¢/USG the following day as downstream buyers bid higher to fulfill contracts for the month . Ethane's rally was brief, however, with Mont Belvieu prices falling to 22.5¢/USG over the next week even as Waha climbed further. Record ethane inventories Ethane inventories hit record highs in 2024, according to EIA data, including a peak of 80.89mn bl in July, 79.5mn bl in August and 77.23mn bl in September. Mont Belvieu ethane has also been in backwardation in December, with January prices at a 2-4c discount to prompt December prices, encouraging selling interest. Sustained cold weather and additional surges in natural gas spot prices may further draw down ethane supplies as higher volumes are rejected into the gas stream, market participants suggest, but as it stands, ethane supplies are likely to remains at or near record highs for the first part of the new year. In the EIA's most recent Short Term Energy Outlook (STEO), the agency projects ethane inventories to end 2024 at 74.1mn bl , which would be a year-end record following a seasonal draw down, and 12.6pc higher than a year earlier. In that same report, including projections for the fourth quarter, domestic consumption of ethane is estimated to be 2.26mn b/d in 2024, up by about 98,000 b/d on the year, and net exports are estimated at 483,000 b/d, up by around 13,000 b/d, whereas production of ethane from natural gas processing is expected to be 113,000 b/d higher at 2.77mn b/d. Playing catch-up If projections are accurate, 2024's record end-of-year ethane supply will exceed the peak previously set in 2020 of 69.6mn bl, based on EIA data. The first VLEC loadings at Energy Transfer's 180,000 b/d Nederland, Texas, export terminal began in January of 2021, resulting in year-end inventories reaching a relative trough in 2022 at 53.55mn bl before rebounding by nearly 50pc in the last two years. Domestic ethane consumption growth has kept pace with or fallen behind growth in production since 2020. Conversely, ethane exports in 2021 jumped by 98,000 b/d to 369,000 b/d on the opening of the Nederland terminal and grew more slowly in 2022 and 2023. Exports of US ethane are limited by infrastructure at receiving terminals abroad and the specialized vessels required to ship the lighter feedstock. Overseas markets are gearing up to take ethane imports over the next few years , and US ethane inventories are likely to continue building ahead of of an expansion to domestic export infrastructure as US production grows further. Enterprise's Neches River export terminal in Beaumont, Texas, is the next scheduled US expansion and is set to complete its first phase in the third quarter of 2025 , adding 120,000 b/d of ethane export capacity. Completion of the second phase in the first half of 2026 would take this capacity to a total of 180,000 b/d. The project, if it remains on track, should curtail ethane inventory growth at the back end of 2025. Until then, abundant supply probably will continue to weigh on spot prices, and the first half of 2025 may see ethane prices fall further, both outright and relative to natural gas, especially since the EIA's outlook also forecasts gas prices to rise through the winter. By Joseph Barbour Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Viewpoint: US LPG cargo premiums poised to fall
Viewpoint: US LPG cargo premiums poised to fall
Houston, 23 December (Argus) — The booming US LPG export market has fueled record spot fees this year for terminal operators that send those cargoes abroad, but those fees are poised to fall next year as additional export capacity comes online. US propane exports surged over the past two years, hitting an all-time high of 1.85mn b/d in the first quarter of this year, according to data from the US Energy Information Administration (EIA). Terminal fees for spot propane cargoes out of the US Gulf coast hit an all-time high of Mont Belvieu +32.5¢/USG (+$169.325/t) in mid-September. US propane production is expected to grow by another 80,000 b/d in 2025 to 2.22mn b/d while the outlook for domestic consumption is fairly steady, at 820,000 b/d next year — meaning even more propane will be pushed into the waterborne market. But that is dependent on US infrastructure keeping up with the pace of production. US export terminals in Houston, Nederland and Freeport, Texas, have run at or above capacity for the last two years given the thirst for cheaper US feedstock, largely from propane dehydrogenation (PDH) plant operators in China. This demand has created bottlenecks at US docks, and midstream operators like Enterprise, Energy Transfer, and Targa have rushed to ramp up spending on both pipelines and additional refrigeration to stay ahead of the wave of additional production. US gas output spurs LPG exports As upstream producers have ramped up natural gas production ahead of new LNG projects, most producers are counting on LPG demand from international outlets in Asia to offload the ethane and propane the US cannot consume. For the past four years, Asian buyers have been more than happy to oblige. US propane exports to China rose from zero in 2019, when China imposed tariffs on US imports, to an average of 1.36mn metric tonnes (t) per month in January-November 2024, according to data from analytics firm Kpler, making China the largest offtaker of US shipments. US exports to Japan averaged 480,000t per month throughout most of 2024, and exports to Korea averaged 460,000t per month in the first 11 months of 2024. China, Korea, and Japan received 52pc of US propane exports in 2024, up from 49pc in 2020, according to data from Vortexa. Strong demand in Asia has kept delivered prices in Japan high enough to sustain an open arbitrage between the US and the Argus Far East Index (AFEI). Forward-month in-well propane prices at Mont Belvieu, Texas, have remained well below delivered propane on the AFEI. In 2020, Mont Belvieu Enterprise (EPC) propane averaged a $143/t discount to delivered AFEI — a spread that has only widened as additional PDH units in Asia have come online. During the first 11 months of 2024, the Mont Belvieu to AFEI spread averaged a hefty $219/t, leaving plenty of room for wider netbacks in the form of higher terminal fees for US sellers, especially as a wave of new VLGCs entering the global market has left shipowners with less leverage to take advantage of the wider arbitrage. The resulting wider arbitrage to Asia has kept US export terminals running full for the last two years. So when a series of weather-related events and maintenance in May-September limited the number of spot cargoes operators could sell and delayed scheduled shipments, term buyers willing to resell any of their loadings could effectively name their price. This spurred the record-high premiums for spot propane cargoes in September. New projects may narrow premium An increase in US midstream firm investments in additional dock capacity and added refrigeration in the years ahead could narrow those terminal fees, however. Announced projects from Enterprise and Energy Transfer, in particular, will add a combined 550,000 b/d of LPG export capacity out of Houston and Nederland, Texas by the end of 2026. Enterprise's new Neches River terminal project near Beaumont, Texas, will add another 360,000 b/d of either ethane or propane export capacity in the same timeframe. These additions are poised to limit premiums for spot cargoes by the end of 2025. Already, it appears the spike in spot cargo premiums to Mont Belvieu has abated for the rest of 2024. Spot terminal fees for propane sank to Mont Belvieu +14¢/USG by the end of November. The lower premiums come not only as terminals resume a more normal loading schedule, but at the same time a surplus of tons into Asia ahead of winter heating demand has narrowed the arbitrage. The spread between in-well EPC propane at Mont Belvieu fell from $214.66/t to $194.45/t during November. A backwardated market for AFEI paper into the second quarter of 2025 means US prices are poised to fall more in order to keep the spread from narrowing further. By Amy Strahan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
WLGA calls for immediate action in African LPG roadmap
WLGA calls for immediate action in African LPG roadmap
The roadmap identifies 11 high-opportunity markets in sub-Saharan Africa where LPG consumption could significantly increase, writes Yasmin Zaman London, 17 December (Argus) — The growth of LPG as a clean cooking fuel in sub-Saharan Africa will remain limited without immediate and considerable advancement in regulation and investment, according to a new roadmap released by the World Liquid Gas Association (WLGA). The report, commissioned by the WLGA's recently formed Cooking For Life Africa Task Force (CFLA), calls for clear, enforceable regulatory frameworks, financing and payment plans to reduce cost barriers, and investment in infrastructure including roads to better support distribution. The roadmap identifies 11 high-opportunity markets in sub-Saharan Africa where under favourable conditions per capita LPG consumption could increase to 25kg/yr by 2030 and 40kg/yr by 2050. In seven markets, including Nigeria, Kenya, Ghana and Cameroon, policies are already in place that will drive growth opportunities, leaving four that need to address this challenge, according to the roadmap. Affordability is an issue in all countries except Ghana. In Nigeria, this is considered a "major roadblock" because of the depreciation of the naira. The roadmap was released after the UN's Cop 29 climate conference, where major European oil firms pledged $500mn to energy access in sub-Saharan Africa and south and southeast Asia. The WLGA established the CFLA at the IEA's summit on clean cooking in Africa earlier this year. Its founding members include TotalEnergies, Norway's Equinor, Nigerian state-owned oil firm NNPC, LPG trading firm Petredec and regional LPG distributor Oryx Energies. "The LPG roadmap, which targets about 60pc of the continent's population without access to clean cooking solutions, will simultaneously address economic, health and environmental challenges across Africa," NNPC's managing director Huub Stokman said. TotalEnergies' vice-president of LPG Biova Agbokou added that the CFLA and the roadmap can also act "as another lever to reach more end-users". Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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