LPG World - argusmedia.com

1 TWICE MONTHLYNEWS, PRICES AND ANALYSIS VOLUME XVIII, ISSUE 15, 7 AUGUST 2012 LPG World Argus Media Ltd : Shifting fundamentals 2 News/inventoriesOlympic games boost UK firm 3 Dow plans capex cut 3 Japanese imports fall 4 Williams concerned over ethane glut 4 Chinese imports continues rise 5US hubs set for arbitrage shift 6 Enterprise Products Partners ups profits 6 Features UK firm shows zeal for dual fuels 7 Japanese buyers return in force 7 Kazakhstan output dips 8 Pakistan proceeds with autogas expansion 9 LPG offers microbusiness opportunity 10 Data Shipping 11 market review Europe 12 market review Asia 13 market review Americas 14 Prices 16 InsideJanAprJulOct5006007008009001,0001, 1001,200201020112012 Propane cif NWE $/tPropane cif ARA $/tJanAprJulOct5006007008009001,0001,100 1,2001,300201020112012 Propane Saudi CP$/tPropane Saudi CP $/tUS NGL firm Markwest has started sales of propane from the Marcellus shale, using a northeast terminal.

2 The deal is another milestone in the growth of US NGL exports US natural gas liquids (NGL) firm Markwest Energy Partners has begun to sell propane from the Marcellus shale to international customers as its giant Mariner East project starts to bear fruit. Markwest will sell the propane from Sunoco Logistics Marcus Hook terminal in Philadelphia, Pennsylvania (LPGW, 24 July, p4). Markwest has yet to disclose the identity of the buyer other than saying it is a large multinational LPG company . The delivery of propane from the northeast US to global markets is crucial to ensure northeast propane markets remain in balance and that northeast propane continues to achieve premium pricing, the Denver-based company said on 2 August. This milestone is part of the partnership s continuing commitment to provide multiple marketing options that will maximise the value of its producer customers NGLs.

3 Export optionsMarkwest did not disclose the size of the shipments or the destination. The company unlike other US firms look-ing to export NGLs from US shale gas extraction does not export from Houston, but from the northeast. This gives Markwest the option to export across the Atlantic and down to the US Gulf coast and beyond. Midstream companies on the Gulf coast are expanding LPG export capac-ity in that region to accommodate greater propane production. But this is the first time a US NGL company has confirmed exports of propane from the giant Marcellus shale, which is in the US northeast (LPGW, 10 July, p1). We are not going to be talking about the specific customers, chief executive Frank Semple says. We are continuing to evaluate opportunities for international sales of propane. In July, rival US NGL giant Enterprise Products Partners tied up a deal with Japanese LPG importer Eneos Globe to sell around 200,000 t/yr of propane from its terminal on the Houston Ship Channel, to take advantage of the newly expanded Panama Canal when work is completed in 2014.

4 Enterprise forecasts US exports to surge to 65mn bl/yr next , Markwest s second-quar-ter profits more than doubled to $ as revenue rose by 11pc reflecting growth in its US northeast operations. Markwest secures customer It was a great privilege to be part of [the Olympics] LPG appliance firm Bullfinch managing director Andrew Williams (see p3)USCANADAS arniaPittsburghMarcusHookExistingSunocoP ipelineMarkwestHoustonFractionatorPropos ed ShellEthane CrackerExistingSunocoPipelineNew MarkwestLiberty PipelineMariner East projectPage 2 2012 Argus Media Ltd August 2012 Argus LPG WorldThe biggest LPG story of the year contin-ues to unfold, with the first unmistakable signs of the US natural gas liquids (NGLs) export wave looking for ready NGL firm Markwest has tied up a deal with an unnamed buyer for propane shipped from the Marcellus shale to Sunoco Logistic s Marcus Hook export terminal in Philadelphia, Pennsylvania and then, presumably, across the Atlantic (see p1).

5 The deal is the first export of Marcellus NGLs. It follows the export deal inked between US midstream giant Enterprise Products Partners and Japanese LPG importer Eneos Globe for about 200,000 t/yr of propane from 2014, to be shipped through the Panama Canal from the US Gulf (LPGW, 10 July, p1).Just two years ago, most of the atten-tion of the international market focused on the rise in the export capacity of Qatar, Abu Dhabi and Iran as the game changer for the market . But NGLs out-put from the relentless US development of shale gas has turned out to be poten-tially a far more important paradigm shift. This is because all that extra supply US exports could reach a massive 65mn bl/yr next year has to find a buyer. Already, US chemical firms such as Westlake have enjoyed an unexpected windfall in quarterly profits because ethane and propane decreased to their lowest prices in years as a result of ample supply made possible by shale gas production , chief executive Albert Chao says (see p6).

6 The international markets are mostly interested in the destination of US pro-pane and this is where ground-break-ing export deals are expected over the next few months. But the US NGL industry is more concerned with ethane, which has dra-matically lost overall relative value this year. The price graph for ethane at the US trading hub of Mont Belvieu vividly demonstrates the effect of the ethane supply glut on prices (see p14). Back in 2008, ethane prices in mid-July touched an annual high of $154 /USG, while US Mont Belvieu prices reached just over 171 /USG (LPGW, 6 August 2008, p14). But now, ethane is around 35 /USG, after dropping to 30 /USG in June, with propane was around 80 /USG. Ethane s relative value to propane has fallen sharply this year, but with noticeable price volatility. Ethane inven-tories at the start of May were 33mn bl the highest levels since July 1995 and added over 3mn bl alone in February and March.

7 The cheaper ethane becomes, the more attractive it is to US petrochemi-cal firms as a feedstock. But this means that all the extra propane may not find a US home, unless it is then exported. EditorialArgus LPG World is published by Argus Media LtdMain offices:London (head office): Argus House, 175 St John Street, London EC1V 4 LWTel: +44 20 7780 4200 Fax: +44 870 868 office: 22 Malacca Street, #08-02 Royal Brothers Building, Singapore 048980 Tel: +65 6496 9966 Fax: +65 6533 4181 Tokyo office: Burex Kyobashi #513, Kyobashi 2-7-14, Chuo-Ku,Tokyo 104-0031, JapanTel: +81 3 3561 1805/+81 3 3561 1806 Fax: +81 3 3561 1807 Houston office: 3040 Post Oak Blvd,Suite 550, Houston, Texas 77056 Tel: +1 713 968 0000 Fax: +1 713 622 2991 Washington office: 1012 Fourteenth Street NW, Suite 1500, Washington, DC 20005 Tel: +1 202 775 0240 Fax: +1 202 872 8045 Moscow office: 12-1 Krivokolennyi pereulok, floor 5, Moscow, Russia 101990 Tel: +7 495 933 75 71 Fax: +7 495 933 7572 Founder: JA NasmythPublisher: Adrian BinksChief operating officer: Neil BradfordGlobal compliance officer: Jeffrey AmosBusiness development.

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