Purvin & Gertz: World LPG supply, prices rising fast

March 19, 2008
Worldwide supply of LPG will expand particularly fast during the next 4-5 years, but record high prices have slowed demand in many developing markets, said Ken Otto of Purvin & Gertz.

David N. Nakamura
Refining/Petrochemical Editor

HOUSTON, Mar. 19 -- Worldwide supply of LPG will expand particularly fast during the next 4-5 years, but record high prices have slowed demand in many developing markets, said Ken Otto of Houston-based consultancy Purvin & Gertz Inc. in opening remarks Mar. 18 to the firm's 21st Annual International LPG Seminar in The Woodlands, Tex.

Several events slowed the expansion of LPG supply in 2007, but Purvin & Gertz expects the growth to pick up in 2008-09.

High LPG prices are reducing demand growth in residential and commercial sectors, especially in unsubsidized markets in developing economies, Otto said.

All of these factors will push more supplies into the petrochemical feedstock sector. A large expansion of petrochemical capacity is under way in the Middle East, which will increase fairly dramatically base-load demand for LPG. Global LPG supplies, however, will grow faster than base demand, which will increase the amount of LPG available for the feedstock market, Otto said.

Supply
Global LPG supply will increase by 43 million tonnes during 2007-12, increasing to about 272 million tonnes from 229 million tonnes, Otto said.

LPG production is growing in most regions of the world, the exception being North America. Because LPG production in North America will be fairly flat, Otto expects the Middle East to surpass North America in a few years to become the largest LPG producing region in the world. The Middle East will expand LPG production more than 45% during 2007-12.

Overall, Otto expects that LPG supply growth will average 3.5%/year through 2012. About 50% of this growth will come from nonassociated gas.

Contact David N. Nakamura at [email protected].