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LPG World editorial: Clean cooking’s watershed moment?

  • Spanish Market: LPG
  • 16/05/24

African clean cooking schemes could prove to be an early energy transition success story now that world leaders view them as environmental imperatives

The $2.2bn in funding pledged for clean cooking programmes in Africa over the next five years, announced at the IEA's Clean Cooking Summit in Paris on 14 May, could be a "turning point", according to the agency's executive director Fatih Birol. Not only would this be true in terms of tackling what is a long-neglected problem. It is also true for the LPG industry, which has been extolling the benefits of a transition to LPG in sub-Saharan Africa for many years.

Other than the dozen or so individual financial commitments made by governments and organisations, what resonated most from the event was just how achievable transitioning sub-Saharan Africa to cleaner fuels such as LPG actually is. Often the immediate reaction is to balk at the challenges — the lack of infrastructure, the lack of regulatory frameworks, the corruption, the cost of the LPG and equipment. Yet this was when it was looked at purely through the prism of the market. Now it is an environmental and social imperative.

Many of the political leaders from Europe, Africa and the US that spoke noted that greenhouse emissions from cooking were comparable to the airline and shipping sectors, yet tackling the former is far less complex, less expensive and receives scant recognition in comparison with the latter two. "We can fix it now… it is not high-tech, it is low-tech," Norway's prime minister Jonas Gahr Store told delegates.

Another often ignored part of the issue is how disproportionately women are affected by cooking with harmful solid biomass fuels — perhaps an underlying factor behind the many years of neglect at a national and international level. This is a gender issue, both Birol and Tanzania's first female president, Samia Suluhu Hassan, noted. The obvious health and social benefits from the transition to clean cooking will be most keenly felt by women and their children, who are at home breathing in the smoke from open fires. Several of the speakers, including African Development Bank president Akinwumi Adesina and World Health Organisation director-general Tedros Ghebreyesus, even spoke of their own experience of growing up in a household with open fires, and the consequent unnecessary suffering their mothers in particular had to endure.

LPG is not the only solution here — others mentioned included electric cookers, biogas, bioethanol and cleaner cooking stoves. And as a fossil fuel, it will ultimately be replaced at some stage by renewable alternatives. But it is the best solution right now for large parts of the region. "LPG is the most efficient in terms of its benefits and its ease of use," Togo's president Faure Gnassingbe said. LPG markets can develop in the region through subsidies and LPG price regulation to moderate volatility, while countries must also invest in domestic LPG production as well as import and distribution infrastructure, he said. Each country will be different, but it is "well within our reach", Gnassingbe added.

From pledge to realisation

The sub-Saharan African region and the LPG industry must now work with foreign governments, financial institutions and private-sector companies to ensure that the large sums pledged are invested in a pragmatic and fruitful way. The IEA will come back in a year's time to report on the progress of the various commitments made at the summit and will provide updates online in an effort to ensure progress and transparency, Birol said.

There is reason for cautious hope. The feasibility of achieving the transition and the relatively low levels of foreign investment involved — and the huge opportunities for LPG companies that will emerge — could create the conditions for success of a kind that has so far eluded many other such ambitions. It would be a huge boon for the world to have one such success story to point to by 2030 in its long, hard struggle to transition to a cleaner energy future.


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17/12/24

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.

Viewpoint: VLGC market faces uncertainties in 2025


16/12/24
16/12/24

Viewpoint: VLGC market faces uncertainties in 2025

London, 16 December (Argus) — Looming tariffs, Panama Canal's new dynamics, limited US export capacity and a continued cap on Mideast Gulf LPG production will bring uncertainty to the VLGC market next year and may keep rates well below 2023's record levels. VLGC freight rates were largely suppressed in 2024 compared with the previous year because of smoother transits at the Panama Canal as water levels rose. Full capacity at the canal resumed mid-year, and this weighed on freight rates because it resulted in global higher tanker availability as it reduced voyage length between the US and Asia-Pacific. Panama Canal transits in 2025 will continue to affect rates with the kick off of the long term slot allocation system, where 40pc of slots available have already been allocated. This will mean there could be fewer available slots in the usual Neopanamax daily auctions, and could make it more difficult for vessels without bookings needing immediate passage. Another crucial factor that pressured VLGCs in 2024 was the reduction of available US spot cargoes because of weather related delays and maintenance at US terminals halfway through the year. High demand for export cargoes matched with a surplus of ships drove premiums for US cargoes to record highs in September, effectively capturing a larger share of the arbitrage and weighing on freight rates. This has since dialled down once terminals caught up with their schedules, but higher premiums for US cargoes is likely to remain a factor weighing on freight until further export capacity comes online in mid-2025 — when Energy Transfer's Nederland export terminal will add 250,000 b/d of export capacity with a new LPG dock. In the east of Suez market, Opec+ has voted to maintain the recent production cuts rather than unwinding them as previously intended. This will continue to cap LPG output and cargo availability in the Pacific Basin market this year, and free up ships to compete in the US Gulf instead. Fewer Mideast Gulf cargoes could add pressure over freight rates in the first half of 2025, before more US Gulf shipments are made available mid-year. This will absorb ships on the long haul Houston to Chiba route and likely support freight rates in the second half of the year. This may be boosted on occasion by short term shortages of ships while a large portion of the fleet is expected to be temporarily out for mandatory maintenance this year, reducing tanker availability. Shipowners BW LPG and Dorian LPG said 80 ships are scheduled to drydock in 2025, double the number of this year. This will match 13 expected newbuild deliveries in the year, and the outcome could support rates. Trump's tariffs But global LPG flows could be significantly disrupted in the case of another trade war between the Washington and Beijing if US president-elected Donald Trump fulfils his campaign promise to impose a tariff on Chinese goods. Should Beijing introduce retaliatory tariffs on LPG, a two-tiered market for US exports to Asia-Pacific could emerge as seen in 2018, when Mideast Gulf cargoes were bought and sold by Japanese and South Korean importers and traders and then resold to China at $15-20/t premiums. Back then several US shipments ended up redirected to Europe as US traders reduced exports to China — although such actions remain speculative for now. A potential trade war remains a significant risk for the VLGC freight market along with further disruptions at the Panama Canal and the continued Opec+ cuts, which could keep 2025 freight rates to levels recorded in 2024. By Yohanna Pinheiro Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

India's Gujarat Gas raises PNG prices in Morbi cluster


13/12/24
13/12/24

India's Gujarat Gas raises PNG prices in Morbi cluster

Mumbai, 13 December (Argus) — India's state-run city gas distribution company Gujarat Gas has increased prices of piped natural gas (PNG) in the Morbi industrial cluster in west India's Gujarat state. This came after it kept rates unchanged since July. Prices of PNG used in the industrial ceramic cluster have been hiked to 46.95 rupees/m³ ($0.55/m³) from Rs44.68/m³ in July. This comes to Rs5.60/kcal on an energy equivalent basis, based on a calorific value of 8,400 kcal/kg. This is slightly higher than propane prices, which is a competing fuel in the region's ceramic cluster. Propane prices in Morbi were pegged at Rs61/kg for December , up from Rs60.30/kg in November because of rising import costs. Propane on an energy equivalent basis is Rs5.50/kcal based on the calorific value of 11,100 kcal/kg, traders said. Gujarat Gas has regained some market share in the last few months by keeping its prices unchanged. But it remains to be seen if ceramic units in the region will switch back to propane again. Propane demand in the region fell to 3.2mn m³/d in November from 4.5mn m³/d in October, regional traders said. Overall gas demand in the region was 7mn m³/d in November. Capacity utilisation of ceramic clusters continues to remain weak because of lower export demand for the upcoming Christmas season in the west, according to traders in the region. Gujarat Gas competes with regional propane distributors, including state-controlled IOC, BPCL and HPCL, as well as private-sector firms Reliance Industries, Aegis Logistics and Gogas. It remains to be seen if propane prices will rise further next month, as Saudi Arabia's state-controlled Aramco kept its December propane contract price unchanged at $635/t. Spot LNG prices have also risen this month, which makes a fall in PNG prices unlikely. The Argus -assessed spot price of LNG delivered to India's west coast for first-half January stood at $14.09/mn Btu on 12 December, up from $12.70/mn Btu a month earlier for December-arriving vessels. Tile manufacturers in Morbi have been switching between PNG and propane depending on LNG import prices, since the latter rose in 2022 as a result of the Russia-Ukraine war. By Rituparna Ghosh Propane vs PNG prices (Indian rupees/kcal) Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US rail group optimistic about 2025 rail demand


12/12/24
12/12/24

US rail group optimistic about 2025 rail demand

Washington, 12 December (Argus) — US rail volume is likely to start strong in 2025, but railroads will need to navigate changing federal policies, the Association of American Railroads (AAR) said. Volume next year hinges on a few key factors, including the resilience of consumer spending, strength in the labor market, and the trajectory of inflation and interest rates, the group said. Railroads will need to remain vigilant as these economic indicators will be critical in helping assess rail traffic and broader economic health in the months ahead, AAR said. "Strong intermodal growth and stable consumer demand offers reasons for optimism," AAR said. "But railroads and the economy alike must navigate evolving policies and potential disruptions" as the US enters 2025 under a new administration, the group said. The AAR'S optimism comes as rail traffic in November "while by no means stellar, suggests that the broader economy remains on stable footing", AAR said. US intermodal rail volume set new records in November. The increase reflected strong consumer demand following job gains that pushed increased spending, AAR said. Intermodal traffic is made up primarily of consumer goods shipped in containers between different modes of transportation, although some scrap metal and specialty agriculture products ship this way. US railroads loaded an average of 282,000 intermodal containers and trailers per week, up by 11pc from a year earlier. That was the highest weekly average for any November since AAR began tracking intermodal data in 1989. Carload traffic fell by 3.8pc compared with November 2023. Carload traffic is primarily made up of commodities. Coal was the "biggest problem", AAR said. US railroads loaded 15pc less coal last month compared with a year earlier, while year-to-date loadings were down by 14pc from the same 11 months in 2023. If coal were excluded, monthly US carload traffic in November would have notched a 10th consecutive year-on-year increase. Industrial products volume was down by 1pc from a year earlier. Manufacturing is a major driver of US carload traffic, and that sector remains sluggish, AAR said. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Mexico’s CRE lays off officials after reform


10/12/24
10/12/24

Mexico’s CRE lays off officials after reform

Mexico City, 10 December (Argus) — Mexico's energy regulatory commission (CRE) has dismissed high-ranking officials and other staff shortly after congress approved constitutional amendments to eliminate independent regulators, market sources said. At least two unit chiefs — the heads of the legal and hydrocarbons units — were let go in recent days, sources with close knowledge of the matter told Argus . These positions are now marked as vacant in the CRE's online directory. In addition, seven subunits within the hydrocarbons division — overseeing natural gas, fuel and LPG markets, including storage and transportation — also appear vacant. The CRE did not respond to requests for comment. The CRE's commissioner president Leopoldo Melchi has designated Guadalupe Hernandez, a legal official in the hydrocarbons undersecretary at the energy ministry (Sener), to oversee certain functions, a source said. The layoffs are also expected to extend to the electricity unit, including its chief, Francisco Varela, according to market sources. Yet, these positions are still listed as filled in the online directory. These dismissals follow congress' approval of constitutional amendments to dismantle seven independent regulators, including the CRE and hydrocarbons regulator CNH. While the regulators will continue operating until laws implementing these changes are enacted — expected by early 2025 — the finance ministry has proposed a 33pc budget cut for the CRE and CNH in 2025. Some recent departures are linked to commissioner Luis Linares, who announced in November that he will step down on 1 January 2025. But the recent layoffs may signal a broader restructuring of the energy regulator. Under the amendments, the CRE's functions will be absorbed by a new office within Sener. The specifics of this transition will depend on the upcoming legal framework. Industry experts and companies are calling for the new regulatory bodies to retain technical independence and sufficient funding to oversee energy markets effectively, even after the constitutional changes. By Édgar Sígler Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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