News ID: 319389
Published: 0241 GMT January 14, 2022

Middle East LPG exports seen higher as contest heats up for Asia demand

Middle East LPG exports seen higher as contest heats up for Asia demand

LPG exports from major Middle Eastern producers in 2022 are expected to increase 6.6% from 2021 as competition for the growing Asian markets intensifies amid expanding supply from other producers, led by the US, traders, producers and analysts said.

Total exports from Qatar, the United Arab Emirates, Saudi Arabia, Kuwait and Iran are estimated to rise to 38.9 million tons in 2022, from 36.5 million last year, the sources said, Platts reported.

Most of these are committed under term contracts, they added, though Qatar occasionally offers spot LPG.

Of these, Qatar's 2022 exports are expected to hold steady at around 10 million tons; the UAE at 9.9 million tons, from 9.4 million tons in 2021 and Saudi Arabia at around 8.6 million tons from 7 million tons, they said.

Kuwait's LPG exports are estimated at 5 million tons in 2022, a source familiar with the matter said. This would be up from around 4.6 million tons in 2021, other sources said.

"[Kuwaiti] Production is around 5.2 million-5.3 million tons [in 2022]. Exports will be around 5 million tons; around 250,000 tons to 300,000 tons is local demand," the source familiar with the matter said. "There are bigger term volumes this year, much bigger, almost all of the production."

The source said unlike 2021, not many spot offers and exports are expected this year. "Only a few may be seen in the second half of this year."

Last June, Kuwait Petroleum Corp. sold via a semi-term tender three 44,000 tons mixed propane/butane cargoes for July-September loadings.

This followed five spot export tenders which KPC awarded consecutively.

"It [2021] was a unique year," the source said, referring to the higher spot volumes. Sources said this could be due to Kuwait's fifth gas train coming on stream and adding 440,000 tons/year, or nine to 10 cargoes/year, in Q2 2021.

An industry analyst projected Saudi Arabia, Kuwait, the UAE, Qatar and Oman to raise exports by 1.5 million tons this year, adding that Saudi Arabia is expected to export more in the first four to five months.

Trade sources said India would remain the main lifter of Middle East term cargoes to secure supply for steady growth in residential/commercial demand, stoked by subsidy support and limited piped gas supply.

S&P Global Platts Analytics estimates India's LPG demand to grow 1.93% to just above 28 million tons in 2022.

Iran's 2022 LPG exports are projected to edge up to 5.6 million tons, from 5.5 million in 2021, trade sources said.

But analysts said Iran is expected to boost exports by 1.9 million tons this year.

Iran, whose energy sector has been subjected to US sanctions since 2018 when former president Donald Trump's administration withdrew from a nuclear pact, aims to bring online 130 million cu m/d of additional gas production capacity in 2022. This includes gas from the delayed Phase 11 of the offshore South Pars Gas Field and emergency onshore operations as domestic consumption surpasses production, Mohsen Khojastehmehr, the managing director of National Iranian Oil Company, was quoted saying by ISNA in December.

Between 2018 and 2020, Iran added 3.2 million tons of LPG production capacity mainly from the South Pars Gas Field and by September 2021 it was projected to add another 2.2 million tons.

China has been the biggest buyer of Iranian LPG, importing 4.94 million tons in 2019, 3.85 million tons in 2020, and 1.965 million tons over January-May 2021, industry data showed.

China imported 7.195 million tons of LPG from the UAE, Oman, Qatar, Kuwait and Saudi Arabia over January-November 2021, down from 9.094 million tons a year ago, Chinese customs data showed.

While imports from Saudi Arabia plunged 32% over the 11 months to 631,119 tons, Saudi flows to China in November rebounded 243.3% on the month to 165,356 tons, the customs data showed.

With the decline in Middle East imports, US shipments jumped 81.3% over the 11 months to 7.772 million tons. Imports from Nigeria rose almost 22% to 618,666 tons, though inflows from Angola fell 13.4% to 631,119 tons.

Imports from Australia, which are making a mark with cargoes from the Ichthys project, jumped 18.3% over the 11 months to 1.204 million tons.

Overall, Chinese imports rose nearly 26% during the period to 22.621 million tons, propelled by demand from the growing propane dehydrogenation sector, comprising 14 plants with combined propylene production capacity of 9.17 million tons/year and requiring up to 11 million tons/year of propane as feedstock at full capacity.

This year, nearly four million tons of new PDH capacity is expected, up from 2.5 million tons of added capacity in 2021, industry sources said, with most of the new capacity scheduled to start in H1 2022.

Global oil markets are starting 2022 with a number of factors that could make for another volatile year.

OPEC is continuing its monthly supply increases but taking a cautious approach so far given uncertain demand. A return of Iran barrels is not a sure thing as the nuclear talks stretch into a second year.

The US tapped the Strategic Petroleum Reserve in a big way at the end of last year, but that did little to soften prices.


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