FACTS: 2008 Chinese LPG production, imports, demand drop

Warren R. True
OGJ Chief Technology Editor-LNG/Gas Processing

HOUSTON, June 11 -- Chinese refinery production of LPG fell for the first time in history last year. At the same time, the country’s imports of LPG continued in 2008 a decline begun in 2005 and Chinese LPG consumption fell for the first time since 2000.

These are the major conclusions of a report by Lijuan Wang and Kang Wu of FACTS Global Energy, Singapore, issued June 9.

For 2009, the authors forecast that China’s LPG output will recover as a result of expected higher refinery crude runs when a couple of local refineries come online. Imports, however, will continue their slide, while exports will “increase moderately.”

LPG consumption in 2009 will recover only slightly, as markets continue to suffer from the global economic slump and natural gas makes inroads into traditional LPG demand.

Production
Sources for China’s LPG output in 2008 were Sinopec refineries (50%), PetroChina refineries (30%), and local refineries (20%). Supply from these sources made up 87.3% of China’s total LPG; the remaining 12.7% came from the Middle East, Australia, Asia, and other countries.

Domestic output last year reached 589,400 b/d, down 4.1% from 2007, said the report, the “first time that China [had ever seen] a decrease in LPG output.” Two factors lie behind the decline: Local refineries increased production of both gasoline and diesel through the first three quarters of 2008 to supply the Beijing 2008 Olympics; and weak domestic LPG demand pushed output lower in final quarter.

China’s LPG production profile differs drastically from that of almost every other LPG producing country in the world. Globally, LPG production on average comes about 60% from gas processing with the great majority of the remainder from refinery operations.

According to OGJ data for 2008, China operated only two gas processing plants. Both were operated by Petrochina in the Ordos basin with total inlet capacity of 774 MMcfd. No throughput or production data were available for 2008 (OGJ, June 22, 2009).

Imports, exports
The decline in China’s LPG imports since 2005 accelerated last year, according to the FGE report, averaging 82,400 b/d, down 36.1% from 2007. The authors explained that a sharp increase in international prices during first-half 2008 combined with weaker demand during second half were behind the decline.

On the other hand, China’s LPG exports since 2005 have been rapidly increasing, to 21,400 b/d in 2008 from 800 b/d in 2005.

Again, a major explanation can be found in the higher international prices, while Chinese refineries faced negative margins overall in domestic markets last year. China’s LPG prices are controlled by its government.
The report’s authors also explained that the geographical differences “for this huge country is another reason why China exports LPG, while importing it.”

Yet another explanation for imports and for Chinese producers’ looking last year to international markets is the drop in domestic consumption In a reversal of a steady increase 2002-07, Chinese consumption of LPG in 2008 dropped to an average 652,200 b/d, down 11% from 2007.

Most of the LPG in China is consumed as fuel by the residential sector accounting for 65% of the total, said the FGE report. Another 25% is consumed by the industrial sector, 2% for vehicle use, and 8% for other uses.

By region, South China and East China are main consumers of LPG.

Guangdong Province is the largest importer of LPG in China, according to the report, “even as imports declined in recent years.” Guangdong’s in 2008, however, dropped to 56,000 b/d from 92,600 b/d in 2007 and 121,300 b/d in 2006.

Sources
Of China’s 82,400 b/d imports in 2008, 70,500 b/d (85.6%) came from Middle East countries: 17,000 b/d from the UAE, 16,100 b/d from Kuwait, 15,100 b/d from Saudi Arabia, 14,100 b/d from Iran, and 8,200 b/d from Qatar.

About 80% of LPG imports was imported by foreign-owned companies or joint-venture companies with a foreign base, said the report.

Contact Warren R. True at warrent@ogjonline.com.

Related Articles

West Cornwall Township hears from Sunoco Logistics

12/12/2014

Sunoco Logistics Partners outlined its safety systems during a West Cornwall Township meeting in Pennsylvania on Nov. 10.

Cost-benefit believability

12/08/2014 In anticipation of what might become the costliest federal regulation in US history, Congress should join the Supreme Court in reviewing the Enviro...

EPA poses tighter ground-level ozone pollution controls

12/08/2014 The US Environmental Protection Agency proposed reducing ground-level emissions limits to 65-70 ppb from its current level of 75 ppb. It also will ...

EPA will set RFS requirements for this year next year

12/01/2014

How bad does regulation of the Renewable Fuel Standard have to become before the US Congress ends a program broken beyond repair?

Asia-Pacific refining primed for capacity growth

12/01/2014

Global crude oil refining capacity in 2014 edged lower from 2013 (OGJ, Dec. 2, 2013, p. 34), according to the latest OGJ Refinery Survey.

Deloitte: US gas supplies rebuilt since last winter, EIA's Sieminski says

11/24/2014 The biggest issue this winter could be electricity generation in New England because of pipeline constraints rather than a drawdown of stored natur...

Petrobras initiates start-up of units at Abreu e Lima refinery

11/24/2014 Petroleo Brasileiro SA (Petrobras) has received permission to commission units at its Abreu e Lima refinery (Rnest) at the port of Suape, near Reci...

MRPL wraps Mangalore refinery expansion project

11/13/2014 Mangalore Refinery & Petrochemicals Ltd. (MRPL), a subsidiary of Oil & Natural Gas Corp. Ltd., has fully completed the long-delayed Phase 3...

Low-cost revamp enhances feedstock profitability for Chinese integrated complex

11/03/2014 In 2010, Liaoning Huajin Tongda Chemicals Co. Ltd. (Huajin), a subsidiary of China North Industries Group Corp. (Norinco), completed a series of re...

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts


On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.

register:WEBCAST


US HYDROCARBON EXPORTS Part 3 — LNG

Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.

register:WEBCAST


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected