European Union sanctions on natural gas exports from Iran may be having unintended consequences for the country’s exports of LPG, according to analysis by Facts Global Energy, Honolulu.
In 2011, said FGE, Iran exported about 3.4 million tonnes of LPG, worth around $3 billion. FGE expects total LPG exports from Iran to reach only 2.7 million tonnes in 2012, and LPG exports in 2013 could fall to 1.6-1.7 million tonnes.
FGE reported recently that five LPG cargoes were exported from Iran in October, but exports for November could have dropped to a single cargo.
South Korean distributors E1 and SK Gas, both based in Seoul, have been the main LPG buyers from Iran. Whether that continues to be the case, said FGE, increasingly depends on insurance coverage.
SK Gas has stopped taking Iranian LPG because Japanese insurers refused to cover the cargoes. LPG trader Petredec, which has loaded cargoes from Iran, has also been hit with the same problem.
FGE said Statoil has had one LPG buyback cargo every 2 months in 2012, but seems close to completing its buyback arrangements and may have no requirement for LPG cargoes from Iran in 2013.
So far, only SK and Petredec have stopped loading Iranian LPG cargoes, according to FGE data. E1 is also under pressure in preparing insurance for vessels and was unable to take Iranian LPG cargoes for November.
FGE said the South Korean companies expect to secure the missing LPG from Middle Eastern suppliers.