LPG Forecast 2018

Leading consultancy for the oil & gas marketswww.fgenergy.com

FGE’s comprehensive assessment of the global LPG market

Leading consultancy for the oil & gas markets www.fgenergy.com

LPG trade has traditionally been a supply-driven business and that is especially true in today’s market. The principal supply driver this time has, of course, been LPG exports, mainly propane, out of the US as a result of the shale gas revolution there. The chart below shows where these LPG exports have gone in recent years.

FGE’s LPG Forecast 2018

FGE’s annual LPG Forecast is a comprehensive assessment of the global LPG market, divided into two main geographical areas, East and West of Suez. In this forecast, FGE examines the industry dynamics on a country and regional level, and then derives an assessment of the trade balances—where propane and butane is moving and why, feeding into this forecast of prices and margins.

Overview

The key trade relationship has been that between the US and Asia—helped by the opening of the neo-Panama Canal in mid-2016 which allowed for VLGC passage.

Which is growing faster—US export supply or Asia import demand?

• The answer in 2016 had been US export supply, particularly when we remember all the unsold LPG cargoes that were sitting off Singapore in August.

• The answer in 2017, especially in the second half of the year, was Asian import demand. In fact, much petrochemical demand for LPG had to be jettisoned, as a result of higher traded prices, in order to balance the Eastern trading market.

In our view, 2017 marked a change in the industry perspective—from how to deal with the existing US export surplus to how to find new sources of supply for the still-growing Asian LPG import market.

New LPG Supplies

Where will these new LPG supplies be coming from?

We do project some 20 million tons of new LPG export supplies between 2017 and 2025.

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US: LPG Exports by Destination

Latin America Europe/Africa Asia

These will be the sources for Asia:• some from Australia—the new Ichthys and Prelude

projects are scheduled to start in 2018,• some from the Middle East—Iran definitely

and Qatar possibly (after the lifting of the gas moratorium),

• and some from Pacific Rim countries. There are three Canadian propane projects out of the West Coast (of which we think two will happen). The Russian LPG export project out of Vanino in the Russian Far East looks increasingly likely.

An uncertainty here is the US. Fears that the US might run out of propane seem to have abated somewhat. But there are no more major export projects on the Gulf Coast. New capacity will probably be needed there post-2020 (note that the green line in the chart following shows the actual and projected LPG exports from these terminals).

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US Gulf LPG Export Capacity, by Company

Enterprise Targa Nederland P66 Other Projected Exports

Corpus Christi may emerge as a major export center in the future.

How much LPG will be coming out of Marcus Hook on the US East Coast? That is difficult to say. Start-up of the Mariner 2 pipeline bringing NGLs from the Marcellus region has been delayed and may happen now in 3Q 2018. Will Mariner 2X happen? We have our doubts. Our guess at the moment is that we could see 4-6 million tons of LPG out of Marcus Hook annually post-2020. But it could be higher. And this would affect the global LPG balance.

Leading consultancy for the oil & gas marketswww.fgenergy.com

FGE’s LPG Forecast 2018

Report Scope

LPG East covers the Middle East and the Asia-Pacific region;

what has happened and what is expected to happen in terms

of LPG projects and LPG supply and demand for individual

countries and for the region as a whole.

LPG West covers North America, Latin America, Africa, Europe,

and Russia/FSU. Due prominence is given to the shale gas

revolution in the United States and its implications for gas

liquids and LPG in international trade in a changing market

environment. As with the East, LPG projects are covered and

LPG supply and demand for individual countries and for the

various regions are given.

LPG Trade divides between East and West and this divide is

reflected in this report. LPG Trade looks at the resulting trade

balances, which LPG is moving to where and how this will

change over the forecast period. Attention is paid to the fact

that LPG is not one product but two, propane and butane, and

that these two products can have different drivers and market

outlets.

Finally, LPG ships are a key part of LPG trade and this report

looks at the prospects for VLGCs (very large gas carriers), the

main workhorses in the trade.

LPG Pricing looks at the principal LPG price mechanisms in

the Middle East and Asia, Europe, and the Americas. The

principal determinants for LPG prices are examined and LPG

price projections are made for Asia, Europe, and the US Gulf

over the forecast period.

The Report Summary brings all these strands together, with a global LPG trade forecast summary.

Table of Contents

1. Introduction 2. Report Summary

3. LPG East

• Middle East

• Asia Pacific

4. LPG West

• North America

• Latin America

• Africa

• Europe

• Russia/FSU

5. LPG Trade

• LPG Trade Outlook

• Propane and Butane Trade

• LPG Shipping

6. LPG Pricing

• LPG Price Overview

• The LPG Pricing Mechanisms East and West

• LPG Price Forecasts

• LPG Price Forecasts East - Asia

• LPG Price Forecasts West - NW Europe

• LPG Price Forecasts West - Mont Belvieu

• International LPG Price Comparisons

Further Information and Contact Details

If you are interested in obtaining further information on this study or on our LPG Service, or would like to order the LPG Forecast 2018,

please contact FGE’s marketing department.

FGE London

Tel: +44 (0) 20 7726 9570

Email: marketing@fgenergy.com

FGE Singapore

Tel: +65 6222 0045

FGE’s LPG Forecast 2018

Leading consultancy for the oil & gas markets www.fgenergy.com

Deliverables

Two hard copies of the report One PDF soft copy of the LPG Forecast

One PDF soft copy of the LPG Forecast Update (available at

the middle of every year)

Weekly LPG Confidential Report

A presentation of FGE’s latest analysis on the global LPG

market

Associated Excel data file

15 hours of consultation with FGE’s LPG team available per

year for telephone discussions, fax, and email inquiries

The LPG team has close to 50 years of experience specializing in LPG, condensate, and light liquid petrochemical feeds.

The LPG team has also authored numerous reports and studies in the gas liquids area and has advised clients around the world on project

development, markets and marketing, pricing, shipping, and infrastructure issues. The LPG team is also well-known at international conferences,

both East and West.

Expert LPG Knowledge and Experience