LPG Forecast 2018 - fgenergy.com

1 LPG Forecast 2019 Leading consultancy for the oil & gas s comprehensive assessment of the global LPG marketLeading consultancy for the oil & gas markets LPG trade has traditionally been a supply-driven business and will increasingly become so as new LPG production comes onto the market . LPG seaborne trade has traditionally been divided into East and West, with some arbitrage between the two regions. As late as 2012, the East had an overall net export surplus to the West of million tons. 2013 saw the East s LPG imports exceed exports for the first time. The deficit between the two has since s LPG Forecast 2019 FGE s annual LPG Forecast is a comprehensive assessment of the global LPG market , divided into two main geographical areas, East and West of Suez. In this Forecast , FGE examines the industry dynamics on a country and regional level, and then derives an assessment of the trade balances where propane and butane is moving and why, feeding into this Forecast of prices and collapse in oil prices in 4Q 2018 has resulted in a changed landscape for LPG trade in 2019.

2 After being implored to step up their production in 4Q 2018, key producers such as Saudi Arabia are now implementing cuts to curb crude output. FGE forecasts that oil prices will recover in 2019 but not to the levels seen in 2018. Our own base case oil price Forecast shows that the prices for Dated Brent crude will slowly recover to the $80/barrel level by 2027. Lower oil prices have had some negative impacts on LPG supply, demand and trade, but also some positive impacts as well. Outlook for 2019: Fears that the US might run out of propane seem to have abated somewhat. Therefore, there continues to be more major export expansions on the Gulf Coast. 2019 will see yet more US export expansions, namely the partial start-up of the Mariner East 2 pipeline at the start of the year and the expansions at Enterprise and Targa in the second half. We expect that, with the Middle East exporting less, CP may be higher than usual over much of the year.

3 In theory that would strengthen the arb economics. Potentially lower Mont Belvieu prices (caused by inventory overhang towards winter 2019) should also help arb economics to some extent. We project US LPG exports running at 41 million tons in 2019, which runs very close to export capacity levels. US Export Capacity: The gap between capacity and actual exports started to open up in 2016 and is projected to close between 2019 and 2021. The chart below shows the resulting VLGC supply/demand balance and fleet tonsEastWe LPG Seaborne TradeExportsWest-East Trade 0102030405060'16'18'20'22'24'26'28'30mil lion tonsEnterpriseTargaNederlandMarcus HookP66 FerndaleCorpus ChristiActual Exports100150200250300350400# of VLGCsSupplyDemandThree factors are currently dominating the international LPG marketplace at the present time: The impact of declining LPG exports out of the Middle East due to crude production cuts, sanctions, and the growth of the West-East arbitrage flow as a result of this.

4 The slide in crude prices that occurred in 4Q 2018 and its impact on LPG markets. The rearranging of the LPG trade flows as a result of the China-US trade Oil Prices in 2019 LPG Shipping OutlookLeading consultancy for the oil & gas ScopeLPG East covers the Middle East and the Asia-Pacific region; what has happened and what is expected to happen in terms of LPG projects and LPG supply and demand for individual countries and for the region as a whole. LPG West covers North America, Latin America, Africa, Europe, and Russia/FSU. Due prominence is given to the shale gas revolution in the United States and its implications for gas liquids and LPG in international trade in a changing market environment. As with the East, LPG projects are covered and LPG supply and demand for individual countries and for the various regions are Trade divides between East and West and this divide is reflected in this report.

5 LPG Trade looks at the resulting trade balances, which LPG is moving to where and how this will change over the Forecast period. Attention is paid to the fact that LPG is not one product but two, propane and butane, and that these two products can have different drivers and market outlets. Finally, LPG ships are a key part of LPG trade and this report looks at the prospects for VLGCs (very large gas carriers), the main workhorses in the Pricing looks at the principal LPG price mechanisms in the Middle East and Asia, Europe, and the Americas. The principal determinants for LPG prices are examined and LPG price projections are made for Asia, Europe, and the US Gulf over the Forecast Report Summary brings all these strands together, with a global LPG trade Forecast of Contents1. Introduction2. Report Summary3. LPG East Middle East Asia Pacific4. LPG West North America Latin America Africa Europe Russia/FSU5. LPG Trade LPG Trade Outlook Propane and Butane Trade LPG Shipping6.

6 LPG Pricing LPG Price Overview The LPG Pricing Mechanisms East and West LPG Price Forecasts LPG Price Forecasts East - Asia LPG Price Forecasts West - NW Europe LPG Price Forecasts West - Mont Belvieu International LPG Price ComparisonsFGE s LPG Forecast 2019 Further Information and Contact DetailsIf you are interested in obtaining further information on this study or on our LPG Service, or would like to order the LPG Forecast 2019, please contact FGE s marketing LondonTel: +44 (0) 20 7726 9570 Email: SingaporeTel: +65 6222 0045 Leading consultancy for the oil & gas markets hard copies of the LPG ForecastOne PDF soft copy of the LPG ForecastOne PDF soft copy of the LPG Forecast Update (available at the middle of every year)Weekly LPG Confidential ReportA presentation of FGE s latest analysis on the global LPG marketAssociated Excel data file15 hours of consultation with FGE s LPG team available per year for telephone discussions, fax, and email inquiriesThe LPG team has extensive experience specializing in LPG, condensate, and light liquid petrochemical LPG team has also authored numerous reports and studies in the gas liquids area and has advised clients around the world on project development, markets and marketing, pricing, shipping, and infrastructure issues.

7 The LPG team is also well-known at international conferences, both East and LPG Knowledge and ExperienceFGE s LPG Forecast 2019