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ISSUE 06 | JANUARY 2017 | USD 30 A CHARCOAL VACCINE: LPG IN MOZAMBIQUE BY RYAN PASUPATHY LPG PRODUCERS -ACT NOW OR GO AWAY FOREVER BY RUDOLF HUBER EQUATORIAL GUINEA’S ALBA PLANT AN INTERVIEW WITH H.E. MINISTER GABRIEL MBAGA OBIANG LIMA ELIXIR:A COMPLETE & CUSTOMIZABLE AUTOMATED REFILLING SYSTEM BY KOSEL INDUSTRIES

OPERATING AND SETTING UP AN LPG PLANT IN NIGERIA AN INTERVIEW WITH TERYIMA DENEN TORYILA,

LPG TECHNICAL & OPERATIONS SUPERVISOR - OVH ENERGY MARKETING


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Greetings from LPG Business Review: Africa Hello

Vincent Choy Managing Director vincent@lpgbusinessreview.com Sheryl Chia Marketing Manager sheryl@lpgbusinessreview.com Ryan Pasupathy Editor ryan@lpgbusinessreview.com Lisnawati Lee Creative | Graphic Designer lisna@olifen.co.id

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everyone!

Here we are at the start of a new year! We hope that last year was a good year for everyone and that all have hit the ground running this year. There has been quite a bit of buzz recently on infrastructure development and supply shortages in Africa, especially with regards to Nigeria. There has been recent outcry about the government not doing its part to develop much needed infrastructure to ensure sufficient supply of LPG. Perhaps the cries have finally been heard and news has arrived that steps have been taken to increase the infrastructure in the country with one new 10,000 MT capacity terminal finally being completed in Calabar in December 2016 and news of another 8000 MT facility near completion at Port Harcourt and with yet another 5000 MT being developed by NIPCO. So things are definitely heating up in Nigeria. For us we personally find pleasure in the development of the industry and we are thrilled that projects are coming to completion and more are getting underway. With Nigeria taking the charge we hope to see other African nations follow suit so that we can see more infrastructure development across the continent. Following up with the investment growth that is taking place in Nigeria we have prepared a delightful issue for you with the focus interview being with an LPG market veteran from OVH Energy (Previously Oando Energy) who gives a first-hand view into the operations and establishment of LPG terminals in Nigeria. We also managed to speak with Equatorial Guinea’s Minister from the Mines and Hydrocarbons Department who spoke with us about the small but interesting LPG industry there. These two interviews are accompanied by two feature articles, one on LPG in Mozambique and another on the imminent threat of LNG has to LPG producers in Africa. We are glad to reconnect with everyone this year and we hope to bring the LPG industry even closer together in 2017. We would like to thank everyone once again for your tremendous support and we look forward to another great year as we empower people to grow and prosper in a clean energy environment through LPG.

Ryan Pasupathy Editor JAN 2017 | LPG BUSINESS REVIEW | 01


CONTENTS FEATURES: 08

A Charcoal Vaccine: LPG in Mozambique By Ryan Pasupathy

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LPG ProducersAct Now or Go Away Forever By Rudolf Huber

INTERVIEWS: 14

Equatorial Guinea’s Alba Plant An Interview with H.E. Minister Gabriel Mbaga Obiang Lima

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Operating and Setting Up an LPG Plant in Nigeria An Interview with Teryima Denen Toryila

ADVERTORIALS: 20

ELIXIR: A Complete & Customizable Automated Refilling System By Kosel Industries

NEWS:

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FGE CONFIDENTIAL: STATISTICS: 02 | LPG BUSINESS REVIEW | JAN 2017

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WORLD LP GAS NEWS INFRASTRUCTURE There has been a proposal submitted for a common user and open access supply logistics system to be developed in Kenya and to be managed by the Kenya Pipeline Company. According to the plan, the company is to construct LPG storage terminals in Mombasa, Nairobi, Nakuru, Eldoret, Kisumu, and Sagana to supply marketers and distributors across the country. - Daily Nation The Public Interest and Accountability Committee (PIAC) says the Ghana National Petroleum Company (GNPC) should desist from financing infrastructure projects which includes LPG infrastructure, with funds allocated to it from petroleum revenues. - Ghana Web Uganda has decided to take the lead in building its $4 billion oil refinery after the South Korean consortium of SK Engineering declined to return to the negotiation table that Russia’s RT Resources had walked away from. Other industries are expected to emerge out of the refinery, such as one that will produce LPG and bitumen. - All Africa The long delayed 1400 km Angola-Zambia Refined Petroleum Multi-Product (AZOP) Pipeline project has been reignited during talks between Angola and Zambia end of 2016. The AZOP Pipeline system would be designed to supply finished products including petrol, low sulphur diesel, Jet fuel and LPG for Zambia, and Katanga Province in the Democratic Republic of Congo. - Pipeline Journal Oryx Energies has built a total of 3 new LPG cylinder filling and storage depots over the past one and a half years in Iringa, Zanzibar and most recently Dodoma in Tanzania, with a combined storage capacity of 175 metric tonnes. - All Africa

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NEWS TRADE & SUPPLY CHAIN

A recent market study conducted by NLNG has stated that under the right conditions the LPG market in Nigeria can grow its penetration and market share by 32% from its current 4 hundred thousand MTPA to 3 million MTPA in just 5 years. - Nigeria Today The price of the 12.5kg cylinder of LPG has increased from N3,500 to N4,500 in Lagos, Nigeria as well as other parts of the country. The Chief Executive Officer, Nigeria Association of Liquified Petroleum Gas Marketers (NALPGAM), Mr Bassey Essien, said the price increase was caused by shortages. He said the situation will change when more vessels bring the product to the state. - The Nation The West Africa Gas Ltd (WAGL), a Joint Venture Company of Nigerian National Petroleum Corporation, NNPC, and Sahara Energy have unveiled two LPG vessels in Ulsan, South Korea, that are thought to help improve the supply network of the subsector which has often lack of stable availability of the gas in Nigeria. - Leadership Nigeria The Kerosene market is under threat from LPG in Kenya according to the Kenya National Bereau of Statistics. The Bereau’s data shows that kerosene prices dropped by 50 per cent from an average of Sh 84.45 per litre in August 2014 to Sh 43.15 in August 2015 yet consumption has remained relatively the same. On the other hand, the data shows the price of the benchmark 13-kilogramme cooking gas cylinder fell from Sh 3109.67 in August 2014 to Sh 2078.67 in the same period in 2016. This caused a spike in demand for LPG from an average of 40 MT annually to 104 MT. - The Star, Kenya LPG usage in Zimbabwe has risen by 182% since 2012 till September 2016, from 6.6 million kgs to 18.6 million kgs according to data from Zimbabwe Energy Regulatory Authority. This increase has been attributed to an increase in consumer awareness of the benefits of LPG as a cleaner alternative to kerosene and wood fuel. - The Chronicle Zimbabwe

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NEWS EVENT & INNOVATION The Cuttack Municipal Corporation (CMC) in India has commissioned an LPG-fired crematorium at Khannagar. The local government body, which claimed that it is the first LPG-run crematorium in the State, has incurred total expenditure of Rs1.5 million towards converting the three-decade-old electric crematorium into a LPG one. - The New Indian Express One of Nigeria’s most well-known actresses, Omotola Jalade Ekehinde, has been unveiled as the brand ambassador for the Nigeria Liquefied Petroleum Gas Association, NLPGA. Mr Dayo Adeshina, the President of NLPGA said, “Omotola is a great addition to the fight for renewable energy and total conversion to liquefied petroleum gas in Nigeria. Omotola would also be working with WINLPG (Women in LPG) as they introduce other women into the LPG world.” - Vanguard Nigeria Saksham-2017, a month-long awareness campaign on oil and gas conservation was organised by the State Level Coordinator for Oil and Gas Industry in India this January. The State government also set June 2017 as deadline for providing LPG to all 13.6 million households in the State. - The Hindu Rwanda Energy Group (REG) hosted a technical meeting that sought to eradicate the use of charcoal and firewood, especially among public servants. The meeting, that included officials from Rwanda Environment Management Authority (REMA), suggested a tax waiver on all the cooking gas accessories and subsidy. - The New Times, Rwanda In December 2016, Emirates Gas organized a training workshop on the safe applications and use of LPG cylinders in Dubai. Students were also educated about the best practices and safest ways to handle and install LPG cylinders. - Al Bawaba

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NEWS LEGAL & SAFETY

The Environmental Protection Agency (EPA) in Ghana, says it will intensify training on safety for owners and attendants of Liquefied Petroleum Gas (LPG) stations as a means of minimising occurrences of gas explosions in the country. - Business Ghana The Director General of the Standards Organisation of Nigeria (SON), Mr. Osita Aboloma, has said in a press statement this January, that increased standardisation and strict adherence to standards requirements will ensure an increase in confidence in the LPG industry. It is his feeling that this will lead to a boost in investment in the sector and that the agency will make sure of this by continuing to maintain these high standards. - Nigeria Today The district administration of Angul in India has launched a massive crackdown on hoarders and distributors of LPG cylinders following reports of distribution of cylinders among voters ahead of the panchayat elections to woo voters across the district. -The New Indian Express Price of LPG in South Africa set to increase by 106 cents per kilogram. The Department of Energy has said that this is because of the contribution of the Rand/US dollar exchange rate and also the increase in crude oil prices. This increase comes along with an increase in other fuels as well. - Oil Review Africa At least three illegal gas filling plants have been closed down in the ongoing crackdown on unlicensed LPG filling plants in Nairobi, Kenya. Inspectors from the Anti-Counterfeit Agency (ACA) and police officers took action and also seized 125 LPG cylinders of different trademarks and a lorry carrying cylinders suspected to have been stolen in one of the Embakasi premises. - Business Daily Africa The Nation apparently has uncovered facts that a ruthless cartel is running a parallel multi-million LPG market in Kenya, putting thousands of lives at risk and minting millions tax free. It is thought that at least 26 illegal gas filling plants located in eight counties now run this black market business that has seamlessly intertwined itself with the legal supply chain, confusing consumers and undercutting revenue from genuine dealers. - All Africa

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FEATURE

A Charcoal Vaccine: LPG in Mozambique Mozambique is a country which has become more well-known due to its vast natural gas discoveries which have been made in the last few years. What’s not been made very clear in the media is that the country has a lot of its own problems internally such as poor electrical grid connectivity and lack of proper gas supply infrastructure. These problems are not able to be solved by using natural gas immediately, as a more than hefty investment is required to establish a natural gas infrastructure network. As with many other African countries that face similar problems, the solution has often been LPG. Firstly, let’s look at how LPG is used in the capital city - Maputo and what problems are being faced. Then we’ll explore what potential LPG has for the future and later, at how it’s solved some very pertinent problems in more rural parts of the country.

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FEATURE A Lust for Charcoal LPG consumption currently is focused at the top level of income earners in the country. The current distribution network does not reach the lowest earners who are still fixated on using charcoal for their daily cooking needs. The current models that the distributors in the country use are unable to sustain distribution to an uninterested rural population who do not know the benefits of LPG. Raising awareness is something that takes a lot of time and investment and the companies would much rather use their resources elsewhere. Even if there was a proper distribution network that could reach the rural communities, it is unlikely that they would even have the finances to begin using LPG. There is a significant upstart cost to begin using LPG which can often be out of reach for people in the lower income bracket – they would require new stoves and new cylinders which aren’t cheap for them and would also be seen as a luxury. ‘Why spend on something that we don’t need?’, would be the rhetoric of the people. A Change in Heart LPG could be seeing an opportunity to capture the hearts of the people however. Charcoal prices in Maputo have been increasing rapidly over the past few years and increased more than 260% from 2010 to 2013 according to a study conducted by the Maputo City Council. Their survey also indicated that more than 60% of the respondents in these low-income areas recognized that LPG is an ideal alternative for cooking. Some other surveys conducted have shown that LPG use has increased 8.4% a year on average since 2010 in Maputo. It has also been reported that even of those who have begun to use LPG, use it as a combination with charcoal. The results showed that only 3% of the respondents use

LPG exclusively and not as a mix with charcoal. This tells us that LPG still has huge potential for growth and might be gaining some real traction in the rural community and that it can further reduce charcoal use much more. Supply Chain Issues Mozambique currently has no refinery of its and must import all LPG from outside the country. 30 years ago, the country did have a refinery but it was shut down during the country’s civil war. The only importer of the gas in the country is Petromoc. The company was given the role of the official importer for LPG into Mozambique by the Government. The company owns and operates a 3000 MT facility on the coast that receives gas from ships. Most of the countries imports come from South Africa and this makes the country almost completely dependent on a single supply source. This makes the country extremely vulnerable to supply shortages from South Africa which have happened as recently as June this year. The problems don’t just stop there though, where distribution within

the city is concerned, LPG is distributed mainly by Imopetro, VidaGas, Mocacor and Petrogas whereas Afrox and Vitagaz handle the rest of the country. Currently only 11kg cylinders are available for use and this is not the most practical for low-use, low-income consumers. Refilling becomes an issue and up-front costs for an 11kg cylinder are high at 643.94 Meticais (9.14 USD) considering household income in rural areas is only 4654 Meticais (66.06 USD). There is a resale market in which retailers do sell the gas to consumers but these retailers often charge consumers more than the current government mandated prices. Wasted Vaccines Vaccine use in vastly rural community based countries such as Mozambique are few and far between. Low income countries rarely see their immunization rates above 80 percent due to inaccessibility and poor transportation and storage conditions. Mozambique has faced these issues along with many other nations in Sub-Saharan Africa. The supply of vaccines to rural healthcare centers has been poor and with less than 35 percent of

JAN 2017 | LPG BUSINESS REVIEW | 09


FEATURE the country with access to the electrical grid, the rural community sees a much larger proportion of their communities off-grid. The impact that this has on health services is undeniable and the quality of the service that can be rendered is dismal compared to those in developed towns. The lack of reliable electricity results in wasted vaccine stock as there is nowhere to store the vaccines till they can be used. Many of the vaccines are even destroyed during the long transit journey to the health care center. Moreover, the lack of power makes it difficult to sterilize medical equipment and even for lighting during medical procedures performed once the sun sets. Government Intervention These problems are not unique to Mozambique. It is the same case for many African nations as well. The key here is to educate and increase awareness through public information and community reach campaigns that teach the uninformed public on the benefits and uses that LPG can have to the society. Businesses can profit if they allocate some funding to these areas but without assistance from the Government it is still a difficult task. The Government has mentioned in

its national policies and strategies that LPG is part of the country’s energy fuel mix. It has said that LPG will be a complimentary fuel in their fuel supply mix and that it will add diversification to their energy supply. Currently LPG consumption is focused mainly at the top end of income earners. The government feels that with more investment into supply infrastructure it will bring down the cost of LPG and the barriers faced by lower end income earners will be able to be trumped through increased awareness and affordability. Private Intervention Though the government is essential in moving industries towards success, there are numerous things

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that can be done by players in the industry to help the industry reach its true potential as well. In Maputo City, several private industry players have identified problems and proposed, if not developed solutions themselves. Petrogas LDA (Subsidiary of Petromoc) – They identified two major problems: low income households find it difficult to invest in an 11kg cylinder due to sparse and periodic income, and the previous 1000 tonne offloading facility in Maputo was insufficient to meet demand. Their solution? Petrogas introduced a variety of bottle sizes to the market with the smallest of these being just 4.5kg which would allow low income households to have the capacity


FEATURE to afford a much smaller cylinder. They also increased the capacity of the facility to contain another 2000 tonnes where LPG would be stored in above ground mounded storage bullets. Gavedra Mozambique – Like Petrogas, they identified that upstart costs in switching from charcoal to LPG is significant. LPG could be provided to various neighborhoods in Maputo to get the community started on using gas and eventually have them become reliant on it. This will consequently create a profitable sales market for distributors. The plan is to seek more financing partners and provide upstart LPG and accompanying stoves to 14,000 families living in neighborhoods Mafalala Polana Canico “A” and Polana Canico “B” District Municipal KaMaxakene (DU3). Collaboration Saves Lives When private entities work together with the government to grow something the results can be truly spectacular. One amazing feat that has been accomplished in Mozambique is through the collaboration of VidaGas and the Fundação para o Desenvolvimento da Comunidade (Foundation for Community Development). In 2002, VidaGas was created and began supplying LPG exclusively to these centers. The supply of LPG to these rural health care centers allowed for all these problems to be solved – vaccines could be stored through LPG powered refrigeration. Eureka! From this, LPG has then been used for cooking, heating and electricity above all things, allowing these centers to provide a proper standard of health care to the surrounding communities. Members of these rural communities can now get all forms of medicine that require cold storage, especially vaccines for infants and procedures can now be conducted at any time of the day, even in the darkest of nights. LPG has not only increased

the quality of people’s lives here – it has saved thousands. Since then, VidaGas has provided gas supply to restaurants, hotels, small factories and even has a large retail network that provides LPG to households replacing their charcoal use. The company makes use of this income network to continue to provide gas to rural healthcare facilities and has since become the largest independent energy service provider in Northern Mozambique with three large tonnage storage and filling facilities across the region serving five provinces and more than 50 percent of the countries rural health care centers.

models like these in Mozambique can be applied elsewhere in Africa and Mozambique could learn how to grow its own LPG industry in Maputo from more developed cities like Nairobi in Kenya and Lagos in Nigeria. What is known for sure though, is that collaboration is what makes things work and it’s what changes lives for the better.

Looking at what has been done here and what more LPG can do for Mozambique makes you feel like there’s endless possibilities for this gas in rural Africa. It’s not that far off if we’re being honest. Perhaps

JAN 2017 | LPG BUSINESS REVIEW | 11


INTERVIEW

Equatorial Guinea’s Alba Plant: An Interview with H.E. Minister Gabriel Mbaga Obiang Lima Ministry of Mines & Hydrocarbons

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INTERVIEW

Equatorial Guinea is a small country with a population of 857000 people, tucked away just below Cameroon, on the coast of Western Central Africa. Besides the mainland the country has 5 tiny volcanic offshore islands that make up its whole. The country’s capital Malabo is located on one of these - Bioko Island. The country has also been blessed with a rich supply of gas condensate reserves, which amount to more than 4.6 tcf. At the recent CWC LNG & Gas Series: 8th Asia Pacific Summit, we managed to sit

down and speak with His Excellency Minister Gabriel Mbaga Obiang Lima of Equatorial Guinea’s Ministry of Mines & Hydrocarbons to find out more about the LPG industry there. The Alba Plant His Excellency began the session by telling us more about the Alba LPG Plant on Bioko Island. His Excellency told us that the Alba field has been producing gas for the country since 1991 and with majority of the gas initially being flared. Production of LPG however, began in 1997 – initial extraction was at 1700 bbl/d and

went up to 2400 bbl/d in 1998. He explained that since 2005, the plant has been modernized and now produces 8,000 bpd of butane, 14,000 bpd of propane and 6,000 bpd of condensed gas. He said that this has been made possible thanks to the development of the Alba Plant on the field by Marathon Oil and Geogas who have greatly assisted in expanding the plant and commercializing the production there. The plant has storage capacity for 1.3 million bbls of condensate and 730,000 bbls LPG.

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INTERVIEW

His Excellency also went on to tell us that, earlier this year, the country’s national gas company - Sonagas begun marketing the State’s share of LPG produced at the Alba Plant. The company has already opened negotiations with offtakers and is looking to market its LPG production stake to international buyers. Currently Equatorial Guinea supplies some African nations like Cameroon and Ivory Coast with LPG from the plant. He said that the Government believes this is a major step for local content in Equatorial Guinea and reiterated what he said to the media, “Sonagas marketing its share of LPG fulfills one of the major objectives envisaged by the State in creating the company a decade ago - that Sonagas increases its capacity across the spectrum of gas activities. The company is evolving to take on more of the gas business throughout the entire value chain.” Increasing Demand His Excellency also told us that because demand within the country is low, that they fulfil all their domestic needs for LPG through the gas produced at the Alba plant. The government is trying to increase demand across the country as there is currently competition from other types of fuels such as Kerosene and Diesel. The Government feels

that it can increase demand of the gas by simply making more gas available and plans to allocate more of what is produced at the plant locally. The only two gas distributors in the country; Sonagas and Geogas have so far been doing a great job of growing demand in the country and he believes that they will continue to improve circulation of the gas in the Equatorial Guinea in the future. His excellency said that the Government strongly supports the use of the gas in the country but it is the poor perception of people that the gas is dangerous and that they are also much more comfortable using kerosene, as it is what they have been using for years and it is what they know. The cost of LPG for a 13kg cylinder is 5000 Central African Francs (7.96 USD) on the island and 8000 Central African Francs (12.73 USD) on the mainland. These prices are subsidized by the government and the LPG subsidy has been in place for more than 10 years. In addition to this His Excellency told us that to further increase use of gas, they plan to increase their exploration efforts by drilling more wells in the field for further discoveries. Further discoveries will allow them to offtake more gas to surrounding nations which will allow them to beef up their

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own local infrastructure and develop an LPG transportation system. His Excellency told us that at the moment, the country predominantly uses LPG for household cooking purposes but they are now looking into the fuel to be used for fueling a fleet of vehicles. The government has already purchased 10 fuel transportation vehicles that run on LPG and there are plans to supply a large fleet of public buses. This plan is still in the initial phases however and will take some time before it goes live. Moving Onwards In April last year the country also set up a new filling plant in Bata which has been developed by TiApm. This goes hand in hand with the Government’s plans to increase demand on the mainland. The Bata filling plant has a 500 bottles/hour filling capacity and 300 MT storage capacity. The plant will greatly assist in serving the whole country in increasing its use of LPG as well as increase their ability to provide cylinder for export to neighbouring countries. His excellency sees the future of LPG in the country as being bright and with so much room for growth and a decent supply of the gas, he is extremely optimistic on the outlook of the local industry there. (LPG Business Review)


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ADVERTORIAL ELIXIR: A Complete & Customizable Automated Refilling System

Manufactured by Kosel Industries Looking to increase

productivity and modernize your filling plant? Put an end to the manual process by which your operator refills individual cylinders one by one and having the cumbersome task of the entire process being carried out by numerous operators. Such manpower could be better used elsewhere, especially in a large plant. This tedious process becomes more and more unsafe with each new operator involved in the manual filling process. When more operators are involved in the filling process, it makes more room for human error and this increases the risk for small accidental gas releases which create new opportunities for fire and possible detonation. To reduce this risk and increase safety and efficiency in the filling process, many filling plants in developing countries have slowly begun to move towards complete automation of the filling process. Asian manufacturer Kosel Industries is an ISO rated designer and manufacturer of LPG filling equipment and are the manufacturers of the ELIXIR electronic LPG filling system. The system is an auto-fill computerized system for LPG cylinder refilling to ensure accuracy and consistent speed throughout the entire refilling process. The system has already been installed in many developing

countries such as India and the Philippines. The systems have been made affordable for these markets to give access to more developing countries to first world technology, so they can make their businesses run more efficiently and effectively. Automation is the way of the future and it should not just be for more wealthy nations. The world is changing and there is no need to remain satisfied with the basics when the technology is now affordable and available. The ELIXIR refilling system complies with numerous safety standards such as AEX and SIMTARS explosion proof requirements. The system has also been able to withstand the scorching summer heat in India and has even been able to withstand the freezing temperatures in Norway, so there is no need to worry about the challenges of a differing climate. The system is an all in one package that is customizable depending on a company’s individual needs and may comprise of stationary filling machines, filling carousels, movable filling plants, chain conveyor systems, electronic check scales, leak detectors, washing machines, hot air sealing machines, palletizing systems and reporting software. In addition to this, there is also a range of equipment for cylinder requalification and reconditioning.

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ADVERTORIAL Stationary Filling Stationary filling machine setups are designed to fill cylinders ranging from 2.5 kg to 50 kg with a 50 g or 100 g resolution and allow flexibility in filling operations. Each stationary filling machine can be equipped with a selfdecoupling or manual filling head for filling cylinders with compact valves. They can also be equipped with a pneumatic manual or manual filling head for filling cylinders with POL filling heads. The system boasts several special features as well which include: Personal Identification Numbers (PIN) Up to 9 PIN (4 digit numbers) which can be assigned into the filling machine. This ensures that each operator must enter his valid PIN before cylinders can be filled. It also allows for Cylinder Category Numbers of Up to 10 categories of cylinders can be pre-set for quick change of filling volumes for easy operations. The keypad has a display which makes it possible to display essential information that can be viewed and filtered easily through, valid fills only, all fills, valid fills and all fills by user number and valid fills and all fills by category number. Carousel Filling For a more automated solution for larger numbers of cylinders, a filling carousel can be used. The carousel is made up of a frame with running wheels that ferries a column of cylinders along it which will be filled once reaching a filling scale. Multiple scales can be attached to the carousel. The speed of the carousel can also be adjusted to suit various filling times and capacities and types of cylinders. Together with a palletizing system

JAN 2017 | LPG BUSINESS REVIEW | 21


ADVERTORIAL

the carousel forms a complete automated chain from unloading of empty cylinders to loading of filled cylinders onto trucks for delivery. This form of automated filling can greatly increase the efficiency of your filling plant. The seamless automation will also increase the safety of the plant by keeping less personnel around the filling area in the rare event should an accident occur. Cybil Software The Cybil software program is the brains behind the system and allows the facility to electronically capture and report on information about filling plant operations for complete analysis and assessment of operations. This information may be used to improve monitoring, control and trace ability of cylinder operations and provides a convenient facility for fault analysis. The software records operating data from plant equipment connected to a computer running Cybil via a separate communication Interface. When the Cybil PC is connected, and communicating to a cylinder filling station via the interface, data is

recorded in the Cybil software database for each cylinder that is filled. Any cylinder filling activity that occurs when the Cybil PC is not communicating with the communications interface is lost however. The software can also be used to extract productivity and filling accuracy from the database. The data can be viewed and printed in numerical graphs with user configurable selections and grouping criteria such as time and date, cylinder size, operator, and filling station. Statistical data and reports can even be generated remotely from your web browser. The reports can even be saved to an HTML file format for electronic storage and remote viewing once complete. For connectivity to other management information systems, the Cybil database is Open Database Connectivity (ODBC) compliant. This means that the external client programs with the appropriate ODBC driver can access the stored filling data and log files. All or portions of the cylinder filling database can be exported to a delimited text format for import into other software

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programs such as a spreadsheet or another database application. An Automated Future The future of all industries lies in automation and the same goes for LPG refilling. Once a technology is no longer something that is only affordable to the wealthiest, it will take over and change entire businesses. The proof can be seen in ELIXIR’s success in India and the Philippines – these countries are not like the ‘West’ and are very much like Africa in many ways. The success of automation there serves as a prime example of what the future could hold for many filling plants in Africa. (LPG Business Review)


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FEATURE

LPG Producers -

Act Now or Go Away Forever About two years ago I was deeply involved in some LPG project concepts for Africa. Already then I pointed out to my clients that I would go for LNG straight but they had their reasons to stick with LPG so I made sure they understood my reservations and I went to work. At the time, the world was already well underway into LPG oversupply mode due to the massive US shale revolution. Africa was to be one of the places where new LPG supply was - at least theoretically - in high demand. Plus, there was a sense among Africans that there would be no easy alternative to LPG if an energy solution for their continent was to be clean and quick.

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FEATURE However, the problem, as so very often in Africa, was and still is infrastructure and a certain attitude when it comes to strategic thinking. Compared to their “Restof-the-world” brethren, African LPG terminals are paltry, their harbors are shallow and their markets are underdeveloped and supply lines into the hinterland are patchy. The only thing that’s real big there is a hunger for more of what they know- LPG, Kerosene, and diesel. But what they really want is heating, light, cooking and power. All things not only LPG provides with just a modicum of air pollution. In fact, LPG has always been something of an exotic side product in the history of hydrocarbons. It’s a leftover from either oil or Natural Gas production and its mostly in use in regions or countries where Natural Gas has not gone - for whatever reason. Africa is big in this with its underdeveloped infrastructure. It’s the only big region where LPG still plays a fundamental role in virtually any country below the Sahara desert and virtually wherever you go.

Natural Gas, however, would be a much more potent option if only it were accessible to those people. For years, sometimes even decades, all kinds of LNG and pipeline proposals have planned of bringing Natural Gas to the African customer and only in the rarest of cases, such a project has been realized at all. One of those notable exceptions is the gas supply pipeline from Mozambique into South Africa. It’s a puny line but its there and it works. Hard to say the same of the West African Gas Pipeline. Up until a few years ago, the problem (and the excuse) was supply. But already in 2012, it became obvious to the informed observer that the scarcity will give way to oversupply eventually. In 2014 this did result in the hardest oversupply situation in Natural Gas and most notably LNG the world has ever experienced. Speculation on the continuation of the bubble was so rampant just before the bubble burst that everyone thought LNG would be hard to get and very expensive for the next decades. So, Africans did not even try. Now, it’s the suppliers that are

in horrible pain as they cannot get rid of their wares anymore and the supply of LNG is just going to grow for the next couple of years. No prospect for an easing in sight. LNG producers have come to the realization that they will have to develop new markets in order to ease the pressure on them. Now you have some of them spending time and money trying to get some of those regasification projects in the farther flung places of the planet off the drawing board and onto a firm Project Schedule. Plus they are also looking for ways to make their economic existence worth the investors while. They develop power plants. That’s business development. There were always LNG projects for African countries, just look at the South African regasification plant proposals. However, nobody really expected any of these to get realized quick enough. This is Africa in the end and there is a good reason why the continent is so dark in night photography. Things take an awfully long time there if they ever get realized at all.

JAN 2017 | LPG BUSINESS REVIEW | 25


FEATURE One thing I learned early on was that it helps if an outside player takes things into his hands. The African market usually is not worth that level of involvement to nonAfricans. Not anymore. LNG players are starting to fall over themselves in their quest to open as many new African LNG markets as quick as they can. They are facing huge volumes of uncommitted LNG and must create more absorption capacity in order to manage that. The hitch is that exactly those LNG projects might provide the death knell to any hopes the LPG producers might have had in the continent. Ghana is the first sub-Saharan African country to have realised LNG - now there are plans for more. South Africa looks very much like a front runner. Let’s just imagine one or two LNG projects going operational in the country. They would bring an awful lot of new gas into the country which would immediately ease that power shortage and this might be precisely the thing that takes the commercial edge off and new LPG project in the country. As LNG usually only a precursor for even more gas.

needs distribution networks and those need a lot of time to build. But make no mistake - when the pressure on LNG markets gets bigger, LNG distribution and small-scale LNG utilisation will crank up into highly creative. The technology is there - just needs someone to make it happen. And as I said, those players exist in Natural Gas. Not so in LPG, it seems, as this industry still

So, LNG finally does the right thing for themselves. When is LPG going to start?

If LPG producers don’t take initiative, LNG developers will snatch away their last big hope for a new market. And they will have only themselves to blame. (LPG Business Review)

RUDOLF HUBER

Rudolf is an entrepreneur and consultant active in the “gas based fuels and energy” industry. He is the founder of countless initiatives all with the aim to promote a gas based economy and affordable environmental protection.

Make no mistake. This is a replacement war as the cheaper LNG will eventually try to squeeze everything more expensive out. And LPG is more expensive on a USD/MMBtu basis than LNG is. Easy target then. One of the few remedies is concentrating on markets where LPG still has an edge - namely on the markets where people still want to be able to bring their gas-bottle home in order to cook and heat. That’s hard to do with gas as it

runs on business as usual and as if the oversupply just did not exist at all.

He is a professional business developer and negotiator who is involved in all aspects of the LNG and the LPG business. He is also very actively promoting green technologies that work well with gas based technologies. Rudolf has helped secure first Regasification capacity for his former employer EconGas at the GATE terminal in 2007 and holds a Masters degree in Commercial and Taxation law from the Jean Monnet faculty in Paris. He also runs a number of blogs, among them www.lng.guru and www.lng.jetzt.

26 | LPG BUSINESS REVIEW | JAN 2017


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INTERVIEW Operating and Setting Up an LPG Plant in Nigeria An interview with Teryima Denen Toryila LPG Technical & Operations Supervisor - OVH Energy Marketing

Personal: Tell us about your journey towards the LPG industry. After the compulsory 1 year of national service, I began my career in the telecommunications industry with Celtel Nigeria, where I was involved in the coordination and supervision of retail activation programs as well as the sales and distribution of SIM cards. I moved to the air conditioning industry as a HVAC engineer for Technoton Limited where I was involved in a lot of engineering projects and gained increased knowledge on gases. Thereafter I moved to Banner Energy, where I worked as an Engineer on its LPG projects. I joined Oando Marketing, one of Nigeria’s leading indigenous downstream companies (now known as OVH Energy Marketing) as an LPG Development Officer tasked to provide market intelligence and develop new business channels for its LPG sales. Having made significant impact in the business, I transitioned to becoming the LPG Technical and Operations Supervisor where I coordinate LPG plant projects, oversee plant operations, and monitor strict adherence to health and safety practices across the company’s 18 LPG plants nationwide.

28 | LPG BUSINESS REVIEW | JAN 2017


INTERVIEW

What is your most notable experience/achievement? I have had several notable accomplishments in my career; probably my most notable achievement was my first LPG engineering project when I had to install 10 LPG plants comprising entirely new systems (that I had little or no clue about), new (first of its kind) in Nigeria at that time. I had approximately 2 days to prepare before mobilizing to site, so I spent that entire time studying the systems and manuals amidst high expectations from my employer to deliver on the project within very close time lines. I successfully delivered on the project and have gone on to deliver on over 20 LPG projects since then. Setting up an LPG Plant: What is the timeline for setting up an LPG filling plant in Nigeria? (From the planning phase to operation) The timeline for setting up LPG plants differs; it typically takes about 2 years depending on the approval process. Let me walk you through the approval process for better understanding. One needs to go through town planning approval, followed by an Environmental Impact Assessment (E.I.A.) of the site. Nigeria typically has 2 seasons in a year - the wet (rainy) season and the dry season; the EIA must be conducted for both seasons. Then you get a fire department approval, acquire a police report, and commence full engineering, design & procurement assessment which will be submitted to the Department of Petroleum Resources (DPR), along with a written application and all documents mentioned earlier. DPR will visit the site to be sure it fulfils all requirements for the construction of an LPG plant. Should the site meet these requirements, DPR will approve and issue you an Approval to Construct (ATC). Once approval is given, you can then commence the equipment acquisition and site construction. The Department of Petroleum Resources (DPR) will visit the site once construction is complete for inspection and certify the design is consistent with proposed plans submitted. They will also witness and sign off on all integrity tests conducted at the plant; following which an operating license will be issued. The process takes about 2 years or more end-to-end. The integrity of the plant itself is a function of the competency and technical capability of both the client and the contractor. The requirements enumerated above do not preclude foreign investors. It’s a standard operating procedure for both local and foreign investors. For investors, it is imperative they partner with local experts with good industry knowledge, technical knowhow and experience; and who is also versatile with the relevant stakeholders.

JAN 2017 | LPG BUSINESS REVIEW | 29


INTERVIEW What does it cost to set up an LPG plant in Nigeria? The standard/ stipulated fees vary depending on the size of the facility amongst other sundry expenses. A breakdown of the estimated costs would be: 1. Town Planning Approval : N200,000 (USD656.28) 2. Fire Service Approval: N100,000 (USD328.14) 3. Police Report: N50,000 (USD164.07) 4. Environmental Impact Assessment (need to engage a consultant, depends on consultant and must be a ministry of environment certified consultant – function of location – this could typically cost you (N2 – N5 million) (USD6562 - USD16407) 5. DPR Approval: N20,000 per 100MT capacity (e.g. 200 MT – 40 thousand Naira) (USD131.26) All in all, without the environmental impact assessment, it will cost roughly around half a million Naira for all the approvals. When looking at construction costs, the major expense comes from equipment which are imported from Europe and America, but in more recent years, a large amount comes in from Asia and this would cost something in the neighbourhood of about N250 million (USD820,347 )for everything. What does the LPG distribution network in Nigeria look like? (Where does the plant get its gas from and how is it distributed from there) How do Secondary Distribution Points fit into the mix? Nigeria is one of the largest producers of LPG in Africa. The NLNG plant on Bonny Island produces significant amount of LPG but was designed primarily for exports. It was expected that the local refineries would meet local demand but unfortunately, that is not the case. So, this means the NLNG plant is required to provide for local demand as well. (The NLNG plant is located off the coast of Port Harcourt Nigeria with most storage facilities in Lagos). Currently Nigeria has an 8000 MT and 4000 MT storage (the 4000 MT has recently been expanded to 9000 MT), another 1000 MT and 4000 MT which would make it all in all about 25000 MT worth of LPG storage capacity in Lagos. Recently another 10,000 MT storage facility was completed in December 2016 in Calabar. There is also another 8,000 MT facility on verge of completion at Port Harcourt. Most of these storage facilities are coastal storage facilities, so when the vessel brings the LPG from NLNG facility, they are docked in Lagos and then from Lagos it discharges the LPG into these facilities, which are then loaded onto road tanker trucks which distribute the gas across the country

30 | LPG BUSINESS REVIEW | JAN 2017


INTERVIEW “I don’t think there is any market in the world that has the kind of potential like you have in Nigeria. The market is thisty for serious investment and investments are coming in gradually.” We are thinking that the dynamics should change within a year or so with new coastal facilities that will come online in Calabar and Port Harcourt, hopefully, they will be receiving more vessels in the other parts of the country as well. In-country distribution via the road network in Nigeria is not so ‘beautiful’, it’s not like you have in Europe and America, it’s a different terrain. Most of the LPG distributed must go by road and it is a real challenge. We have a lot of inland storage facilities in Nigeria, most of them are of 1000 MT storage capacity and not connected by pipeline. So, if you needed to move a 1000 MT from the coastal storage depots to the inland storage depots that would take about 50 trucks to fill it up. It would have been a lot easier if we had them linked up by pipeline. There are a lot of moderately sized LPG filling plants across the country. Nigeria has about 350 of these across the country (within 50 MT – 100 MT storage capacity). From NLNG to coastal storage depots, it goes via trucks to the LPG inland storage depots and LPG filling plants and from there it goes to the secondary distributors (cylinder sellers who take from the filling plants), who then distributes to the end users and maybe to tertiary distributors. So for the filling plants, are these all secondary distribution points? Do they do their own filling and distribution to the retailers? Actually I would say that we have 2 kinds of secondary distribution and with regards to the filling plants, I would call them primary distributors and not secondary distributors.

The filling plants are the ones who supply the secondary distributors with gas for their cylinders. The secondary distributors fill a thousand cylinders or thereabout and distribute directly to end users. There is a new set of secondary distributors in Nigeria (these guys are the second type) – they own filling plants of their own which are mini plants, these are 1 MT – 5 MT storage capacity which are typically installed in gas stations. So they normally buy in bulk from primary distributors (the filling plants) about 1 -2 MT using bobtail trucks which they in turn fuel to end users from gas stations. The primary distributors (the gas plants themselves) also distribute to end users. So for me, if my cylinder is empty, I can take it, drive to any filling plant, walk into it, pay for the gas and get the cylinder filled - there is not much restriction in Nigeria. So you can go to a primary distributor and buy it directly from him or could give a call to a secondary distributor who would bring the gas to your home or you could even bring the cylinder to the nearest gas station where you fuel your car and buy from the new kind of secondary distributor who is filling from a small skid plant or mini plant. What is the current penetration of filling plants across the country? Is there still much room for growth? Well… Nigeria is on the verge of an explosive growth of the LPG industry. I don’t think there is any market in the world that has the kind of potential like you have in Nigeria. The market is thirsty for serious investment and investments are coming in gradually. Over the past year, we’ve had about 15,000 MT of new storage capacities. The per capita consumption in Nigeria is among the lowest in West Africa.

JAN 2017 | LPG BUSINESS REVIEW | 31


INTERVIEW

Nigeria has a population of about 170 million people according to the latest estimates and LPG penetration is only about 5%. The figures for LPG use in Nigeria in 2015 only stood at about 400,000 MT for a population of 170 million people - this is merely a scratch for a population that size. Nigeria has potential for LPG industry to 5 million MT per annum, so we are doing less than 10% of what we could be doing. So really, there is a lot of potential and room for investment. It seems to be much more saturated in places like Lagos which is a cosmopolitan city where literacy and education is high. Typically, the average person in Lagos uses LPG daily but you also have to consider looking at the rural parts of Nigeria which is completely not supplied with LPG. So, if anybody looks at that, the potential its really, really, huge, I repeat, I don’t think there is anywhere in the world that has the kind of potential for LPG goods and investment like Nigeria. Operating an LPG Plant What are the most important health and safety issues that need to be monitored during operation of an LPG filling plant? I think for me, from my experience, the most important part of the operations, is the operators – the people operating the filling plant. There is really, to a large extent a scarcity of qualified personnel available in Nigeria to run an LPG plant. So typically when you are hiring staff, they have little to no training or experience in running an LPG plant. So the biggest risk you face, is having an operator who is not knowledgeable enough. The need to conduct initial and ongoing trainings cannot be over emphasized to ensure one has the right operators. In my opinion, the highest risk involved and the single most important safety factor is adequate training and competence in plant operations. For our operations we make sure that we have a series of trainings both formal and informal, both on the job and off the job, to ensure our operators are at their best - it really is safer to run a poorly constructed LPG facility with competent operators than to run a properly constructed LPG facility with incompetent operators. The operators come first and are the most important factors even before the facility itself. So just to summarise, the highest significance where safety is concerned are the operators, adequate training and then the quality/ standard of the facilities.

32 | LPG BUSINESS REVIEW | JAN 2017


INTERVIEW

What sort of operation costs are involved in running an LPG plant? Would you be able to give a ballpark figure/ rough estimate of the monthly costs involved in operating a plant? After staff costs, the most expensive part of operation is power. In Nigeria, we don’t have good public power supply so you would spend about 20 - 30% of your total cost on power which must be run on diesel – these are stand-alone generators running the plant. Let me give you an example, we have a 100 MT LPG facility that fuels about 15 MT a day. To operate the plant, we have about 14 staff members - 8 operate filling machines and the sorting / carrying cylinders, a plant manager and admin staff and about 2 security officers. The average cost of manpower is about 1.2 million Naira (USD 3937) per month. Without staff cost, we would spend about N180,000 (USD590.65) for diesel (power), N120,000 (USD393.77) for diesel cost, N60,000 (USD196.88) public power cost (which is not reliable). LPG equipment rarely breaks down if you perform your regular maintenance, daily checks, monthly checks, and quarterly checks and with that we rarely need to buy spares, we don’t spend much on spares. So typically, it’s just the cost of servicing equipment and the generator which will amount to about N200,000 (USD656.28) in a month. Other costs would include a supply of consumables, seals, etc. – typically for a plant in Nigeria – the turnover would be about 250 MT in a month and spend about 2 million naira a month and which about N1.2 million (USD3937) goes to Staff cost. All in all, it costs about N2 million (USD6562) to fill out about 250 MT of LPG every month. Why is diesel used for power and not LPG itself? LPG can be used, it just has not been explored. Typically, a lot of industries in Nigeria are all powered by diesel, even our homes and our offices. Diesel is readily available. You could say an LPG generator could be easily installed and piped from your main storage to a smaller storage to supply an LPG generator but unfortunately there are not many LPG generators in the country now, they are only just starting to come in. The thing is most of these types of generators have been designed for propane and not for butane which is what is generally used in Nigeria. I am sure though that as the market grows, we may be able to explore butane powered generators and engage more manufacturers who might be able to provide butane powered generators. A big part of it, is also due to cost - the cost of diesel, slightly cheaper than cost of LPG. It might be cheaper to run on diesel than LPG.

JAN 2017 | LPG BUSINESS REVIEW | 33


INTERVIEW Moving Forward What needs to be done to improve the overall LPG distribution network and growth of the LPG industry in Nigeria? Infrastructure - we need infrastructure across the LPG value chain. I’ll give you an example of the typical way things work in Lagos. When an LPG vessel comes into Nigeria, we only have one LPG facility with a dedicated jetty in Lagos. All other facilities (about 5 of them) are connected to a major jetty that also receives other petroleum products. Most petroleum products imported into Nigeria (other than LPG) have a higher demand than LPG, so preference is given to petrol, aviation fuel, diesel and then LPG. So, you may have an LPG bearing vessel having to wait for several days. Jetty expansions would help facilitate demand for LPG in the country. Facilities outside Lagos could also go a long way in improving access to LPG. Also, the transition of LPG from coastal storage depots to inland storage depots which is done typically by road (which are not in good condition) forestall the distribution process. Perhaps we could consider using rail or most preferably link the inland storage depots via pipeline - it would help the supply of LPG in Nigeria. . Most importantly, cylinders - the typical Nigerian is not able to afford the initial cost of cylinders. Investing in the provision of LPG cylinders especially for rural communities will aid the growth of LPG use in Nigeria. I think that if we take from the lesson learned from India, Indonesia, Brazil and all countries that have grown their LPG industries significantly, you will realize that the governments of these

34 | LPG BUSINESS REVIEW | JAN 2017

countries made significant investment in providing this infrastructure. If we can have half that level of commitment and investment from the government, I am sure Nigeria can very easily grow their LPG industry by more than a 1000% over the next 5 - 6 years. I am so confident about that because of the amount of potential we have in this country. Despite the multi-faceted challenges in Nigeria’s LPG industry, this sector will thrive following proper assistance from the government, tactical strategies, and operational efficiencies as it’s a cleaner, healthier and more affordable energy source. The views expressed in this publication are solely mine and does not represent the position of my employer.


FGE CONFIDENTIAL Market Feature— Higher US Gas and NGL Prices “US gas and NGL prices have surged since mid-November.” We know why oil prices—and by extension international LPG prices—

are higher in December than in November. OPEC reached an agreement on oil production curbs on November 30. But why are US gas and NGL prices so much higher? This has very different explanations. The table below shows how these prices have surged since mid-November.

Market Feature— VLGC Travails “Oriental Energy and the Indian company Varun have been in the shipping news this week.” Two stories this week highlight the current travails in the VLGC market.

The star performer has been Henry Hub gas, up over 50% since that time.

Henry Hub Gas. The fall weather had been mild. But when colder weather arrived in late November it caught many traders on the hop. They scrambled to buy gas, pushing up prices in the process. This price surge may be only short term in duration. In fact these prices have already started to retreat on the prospect of warmer weather. Still, the DOE has updated its Henry Hub gas price forecast to $3.27/mmBtu for 2017. Belvieu Ethane. We have had two previous rallies in the Mont Belvieu ethane price this year. The higher prices had encouraged producers to stop

36 | LPG BUSINESS REVIEW | JAN 2017

Oriental Gas and its VLGC Charters It is being reported that two shipowners—the trader Petredec and the Chinese company Pacific Gas (a subsidiary of Shandong Shipping)— are planning to take legal action against Oriental Energy over their alleged defaulting on charter payments and contracts on seven VLGCs. The seven ships—three from Petredec and four from Pacific Gas—had been fixed by Oriental Energy for ten years at rates that were said to have been in excess of $1 million per month. Current time-charter rates are approximately half of those levels. Petredec’s three VLGCs—all newbuildings—are presently anchored, with two ships in Asia and one in Brazil. Varun Shipping’s New VLGC The Indian company Varun Shipping had acquired the 2001-built BW Borg (renamed Maharishi Vishwamitra) for $42.5 million in July. The vessel has been idle since that time. Finally this December Varun was able to secure an Indian charter for this vessel with Bharat Petroleum, but at a knockdown one year charter-hire rate of $525,000 per month. The vessel is expected to load its first cargo, in Kuwait, next week.


FGE CONFIDENTIAL leaving ethane in the gas as they would make more money by selling ethane on the market. However, this extra ethane quickly produced a market surplus and traded ethane prices soon fell. This time the value of ethane in gas is higher and ethane could probably maintain close to current levels until gas prices come off more. Belvieu Propane. The surge in Belvieu propane prices has been more modest, only around 20% since mid-November. Propane has been fairly priced to compete against 26 cent/gallon ethane in the US petrochemical feedstock market. Recent bullish factors for the propane price have been: • the larger-than-expected 3.6 million barrel propane inventory draw reported this week; • and no cancellations expected on January LPG export cargoes (despite the arb economics East turning unfavorable).

European Petchem Propane Cracking

“Oriental Energy and the Indian company Varun have been in the shipping news this week.” As extra propane began arriving in Europe in 2013, the naphtha/propane price spread widened during the year, encouraging those coastal petrochemical plants with propane flexibility to maximize their propaneintake. The chart following shows the increased cracking of propane (plus some butane) at steam crackers in NW Europe since 2012.

In addition, the cracking of propane seaborne cargoes has extended into the Mediterranean, in Portugal (at Sines) and in Spain (at Tarragona). The propane/naphtha price spread in NW Europe has been seasonal, narrower in the winter and wider in the summer. The propane discounts were much higher in 2014 when crude oil prices were higher. The extent of discounts has gone down since that time, particularly in the summer. The summer propane prices perhaps held up better in 2016 because the marginal source of propane to Europe, propane from the US Gulf Coast, was uneconomic at lower propane prices. The summer propane prices perhaps held up better in 2016 because the marginal source of propane to Europe, propane from the US Gulf Coast, was uneconomic at lower propane prices. Even so, propane has remained attractive to crack against naphtha at these lower price spreads.

JAN 2017 | LPG BUSINESS REVIEW | 37


FGE CONFIDENTIAL Propane Cracking by Company

The Ethane Factor

The main companies in NW Europe cracking imported propane today are: BASF at Antwerp in Belgium • Borealis at Stenungsund in Sweden • Dow at Terneuzen in Holland • INEOS at Rafnes in Norway • and Sabic at Teesside in the UK.

Propane does face competition from ethane which will affect its usage in 2017. Three of the LPG importing companies above—Borealis, INEOS, and Sabic—have contracted for long-term US supplies of ethane.

The tables following shows the estimated cracking volumes by company in 2015 and 2016 based on the large cargo LPG import volumes that arrived at their terminals.

This will have a significant impact on their propane importing plans in the future. The reason is that one ton of ethylene can be made by 1.2 tons of ethane but will require 2.3 tons of propane. Thus substituting ethane for propane, everything else being equal, will back out more propane as feed.

The table below shows 2015.

The ethane purchase arrangements are: • Ineos—900,000 tons per year into Rafnes and Grangemouth. The ethane imports into Rafnes started in March, into Grangemouth in September 2016. • Sabic—750,000 tons per year into Teesside, which started in November 2016. • Borealis—250,000 tons per year into Stenungsund, which will start sometime in mid-2017.

The next table shows 2016.

Dow cracked record amounts of propane at Terneuzen during 3Q 2016. But the effect of new ethane by INEOS and Sabic can be seen in their declining propane intake at Rafnes and Teesside during the second half of the year. Borealis propane purchases are expected to start declining in 2017.

A fourth cracker operator in NW Europe, Versalis at Dunkerque in northern France, is reported to be upgrading its furnaces to take US ethane as feed. However, this cracker is not a propane import buyer and its use of ethane thus will not therefore affect the propane inflow into NW Europe.

Feedback Do you have comments, questions, or opinions on this piece or issue? We would appreciate your feedback. Send us your feedback or comments to FGE@FGEnergy.com

38 | LPG BUSINESS REVIEW | JAN 2017


STATISTICS Country

LPG Consumption

% Household Use

% Industrial Use

% Transport Use

Produced LPG

Imports

Exports

Argentina

1414k MT

68%

5%

0%

2480k MT

0 MT

1066 MT

Australia

3.64M MT

21.51%

29.06%

8.72%

2.01M MT

440k MT

1243k MT

Austria

2.09M MT

29.2%

39.37%

19.38%

0 MT

68k MT

22k MT

Belgium

192k MT

40.63%

17.19%

19.79%

0 MT

1.743M MT

732k MT

Bolivia

330k MT

95%

5%

0%

330k MT

1k MT

0 MT

Brazil

7329k MT

71%

29%

0%

5484k MT

1845k MT

0 MT

Canada

3.53M MT

6.24%

42.3%

8.75%

4.79M MT

106k MT

3.112M MT

Chile

1214k MT

77%

22%

0.8%

261k MT

1045k MT

9k MT

China

21.80M MT

66.81%

24.27%

2.7%

-

3.27M MT

928k MT

Columbia

481k MT

87%

8%

0%

571k MT

0 MT

92k MT

Costa Rica

114k MT

46%

47%

6.1%

3k MT

115.18 MT

0 MT

Croatia

156k MT

34.74%

11.03%

36.09%

-

43k MT

124k MT

Cuba

118k MT

60%

40%

0%

58k MT

93k MT

0 MT

Cyprus

52.2k MT

71.15%

11.86%

0%

0 MT

49.56k MT

0 MT

Denmark

236.41k MT

6.69%

15.52%

0%

162.69k MT

73.72k MT

138.72k MT

Dominican Republic

790k MT

43%

4%

52%

29k MT

727.5k MT

0 MT

Ecuador

1047k MT

91%

7%

1%

231k MT

821k MT

0 MT

Egypt

4.342M MT

99.4%

0.6%

0%

1.475M MT

2.184M MT

0 MT

El Salvador

260k MT

71%

29%

0%

14k MT

188k MT

4k MT

Estonia

7.4k MT

36.2%

39.4%

1.9%

0 MT

12k MT

3780 MT

Finland

344k MT

1.16%

97.67%

0%

-

293k MT

10k MT

Georgia

16.6k MT

85.54%

0%

12.65%

0 MT

16.9k MT

0 MT

Ghana

251.8k MT

48.5%

8%

43.5%

31.60k MT

148k MT

0 MT

Guatemala

255k MT

81%

18%

1%

0 MT

351k MT

104k MT

India

15.603M MT

83.95%

7.2%

4.03%

2.213M MT

-

-

Ireland

128k MT

35%

12%

8%

-

92k MT

26k MT

Jamaica

100k MT

39%

0%

0%

0 MT

71.71k MT

0 MT

Japan

16.3M MT

49%

30%

6%

3.1M MT

13.2M MT

-

Macedonia

61.031k MT

14.88%

6.89%

68.5%

24.416k MT

40.949k MT

2.667k MT

JAN 2017 | LPG BUSINESS REVIEW | 39


STATISTICS Country

LPG Consumption

% Industrial Use

% Household Use

% Transport Use

Produced LPG

Imports

Exports

Malaysia

2.558M MT

24.32%

4.77%

0%

621k MT

396.46k MT

384.956k MT

Mexico

8625k MT

78%

10%

8%

6658k MT

2692k MT

0 MT

Netherlands

4.192M MT

6.35%

64.65%

0.52%

1.599M MT

4.013M MT

1.427M MT

New Zealand

145k MT

40.15%

36.35%

6.57%

155k MT

6760 MT

14k MT

Nicaragua

82k MT

90%

9%

0%

18k MT

57k MT

0 MT

Norway

1.04M MT

<1%

84.93%

<1%

6.98M MT

233k MT

6.142M MT

Panama

359k MT

96%

2%

2%

0 MT

359k MT

0 MT

Paraguay

85k MT

79%

1%

20%

0 MT

79k MT

0 MT

Peru

1687k MT

56%

9%

35%

1766k MT

0 MT

231k MT

Portugal

821k MT

48%

16%

4%

369k MT

541k MT

68k MT

Poland

2.29M MT

13.26%

6.5%

73.26%

340k MT

1.999M MT

229k MT

Puerto Rico

102k MT

85%

15%

0%

45k MT

-

-

Serbia

362k MT

9.57%

17.07%

65%

202.21k MT

164.4k MT

14.167k MT

Seychelles

342k MT

68%

32%

0%

0 MT

3428.84 MT

-

South Korea

7.998M MT

9.03%

30.75%

50.18%

1.739M MT

5.705M MT

70k MT

Spain

1592k MT

67%

25%

2%

1443k MT

331k MT

84k MT

Sweden

310k MT

1.27%

90.33%

<1%

-

1.142M MT

347k MT

Thailand

6.898M MT

29.13%

7.70%

26.3%

5.462M MT

2.025M MT

10.107k MT

Ukraine

589k MT

4.58%

1.19%

91.85%

500k MT

361k MT

0

Uruguay

124k MT

88%

12%

0%

89k MT

45k MT

7k MT

Venezuela

2969k MT

38%

6%

0%

2972k MT

0 MT

998k MT

*Information correct as of Jan 2016 1 Metric Tonne (MT) of this product

Energy equivalent

1 Metric Tonne (MT) of this product

Energy equivalent

LPG

1.13 toe

LPG

1.714 Mtce

Contact Us!

We are working on growing and developing a more comprehensive LPG statistics database. If you have such data, let us know, we would love to get in touch with you. We can be reached at ryan@lpgbusinessreview.com.

40 | LPG BUSINESS REVIEW | JAN 2017


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LPG Business Review  

Africa Edition Issue 06 - Jan 2017

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