P&G: LPG will resume supply growth, expand by 2013
Global and regional economic recovery during 2010-11 will prompt global LPG supply to resume where it left off when the recession hit.
Warren R. True
Chief Technology Editor-LNG/Gas Processing
THE WOODLANDS, Mar. 10 -- Global and regional economic recovery during 2010-11 will prompt global LPG supply to resume where it left off when the recession hit.
Worldwide trade in LPG will also increase over the near term with a growing surplus in markets east of the Suez Canal pushing more LPG into western markets. In the West, more LPG will become petrochemical feedstock in that price-sensitive market.
LPG pricing, therefore, will be lower than for competitive fuels and thus improve market conditions in several demand sections, mainly petrochemical, residential-commercial, engine fuel, and industrial.
These are some of the main conclusions offered Mar. 9 by Ken Otto of Purvin & Gertz, Houston, at the consultancy’s 23rd annual International LPG Seminar in The Woodlands, near Houston.
Global LPG production in 2009 declined year-on-year for the first time in modern history, Otto said, due mainly to cuts in crude oil production, especially in the Middle East, and to project delays.
Global LPG supply will rise to 270 million tonnes in 2013, however, from 235 million tonnes in 2009. Through 2013, supply growth among Mideast producers will be strong, pushing the region past North America by 2011 to become the largest LPG producing region in the world.
Overall, worldwide LPG growth through 2013 will average about 3.5%/year.
Otto stressed that LPG has always been and remains a byproduct of both oil and natural gas production. Fluctuations in its production volumes are driven by this fact, not by market demand.
Thus new projects for domestic gas use and for LNG production and increases in oil production rates among Mideast members of the Organization of Petroleum Exporting Countries directly affect LPG supply. Specifically, LPG production will rise sharply among Iran, Qatar, and the UAE, increasing by about 14 million tonnes by 2013.
Asia, on the other hand, produces most of its LPG from refining operations. And, therefore, as that industry expands to meet rising demand for transportation fuels in Asian developing countries, said Otto, LPG supply will expand as well.
Asia is in fact already the world’s largest regional consumer of LPG, making up more than 30% of global demand. And that share is growing, he said.
Coming on rapidly in demand, however, are the countries of the Middle East. This growth is being driven by rapid expansions in the petrochemical industry and continued steady growth in the residential-commercial markets.
North America is second in LPG demand, holding more than 24%.
Contact Warren R. True at email@example.com.