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.
