Abstract
Supply of LPG is forecast to grow over the next decade from the present level of 180 million t/y to about 185–190 million t/y, depending on demand in Asia which is rising rapidly and on new LPG export projects. Most of the increase in supply will come from new gas and crude oil production, from new LNG ventures, and from refineries reducing the n-butane content of motor gasoline.
Pricing will remain volatile as a result of crude oil price volatility, variations in the winter weather in the Northern Hemisphere, and as a result of competition between ethane, PPG, naphtha and condensate as ethylene cracker feedstocks.
Saudi Aramco is the world's biggest exporter of LPG/NGL, with a capacity rising from 17.5 million to more than 20 million t/y over the next decade. It plays a key role in the pricing of LPG, and since Oct. 1, 1994, has introduced a new “contract price” (CP) formula which in winter months has raised its revenue by up to $30/tonne. Its move has upset most of its clients and some of them have cancelled their contracts.
Demand for LPG in OECD countries will continue to show steady growth. The increase in demand will be more rapid in the relatively less developed OECD countries, as the trend in Spain has shown in recent years.
Provided that the LPG price is competitive, demand in China, South-East Asia and the Indian sub-continent could grow beyond current projections. Consumption in these countries will depend on the installation of distribution facilities and the rate at which LPG can substitute for traditional fuels and kerosine as well as compete for limited disposable incomes.
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