ISSUE 02 | SEPTEMBER 2015 | USD 30
FROM THE PERSPECTIVE OF A GAS RETAILER IN KENYA; FROM HUNTER TO HUNTED CUSTODIANS OF LPG SAFETY IN SOUTH AFRICA INTERVIEW WITH KEVIN ROBERTSON, LPGSASA DROWNING IN LPG CLEAN COOKSTOVES SAVE LIVES - THE LPG REVOLUTION
MAKING ILLEGAL REFILLING; A THING OF THE PAST INTERVIEW WITH JONATHAN BENCHIMOL, MANAGING DIRECTOR, FOGAS & PRESIDENT, AIGLP
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LPG TAIWAN 2015
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ASIA LP GAS SUMMIT 2016
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EVENT CALENDAR LPG TAIWAN 2015
ASIA LP GAS SUMMIT 2016
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02 - 04 March 2016 | Tokyo, Japan
18 - 20 July 2016 | Dar Es Salaam, Tanzania
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EDITOR’S
NOTE
Welcome to the LPG Business Review : Africa Edition Hi everyone! Have we got a great issue for you?!
Vincent Choy Managing Director vincent@lpgbusinessreview.com Denise Lim Marketing Manager denise@lpgbusinessreview.com Ryan Pasupathy Editor ryan@lpgbusinessreview.com Puspo Aurum Creative | Graphic Designer puspo@olifen.co.id Our Address: LPG BUSINESS REVIEW 52 Foch Road, #02-02 Singapore 209274
First and foremost would like to thank everyone for the overwhelming success of our first issue. Since our launch at the Africa LPG Summit in Nairobi, we have reached out to many in the industry and continue to connect with more people each new day. We hope that as our network grows, yours will too. Despite the recent shortage of gas throughout many nations on the continent, the spread of LPG in Africa is expanding. A terrific opportunity to support the explosive growth of LPG in a market that is in dire need of it has surfaced and we’d be fools to not do something about it. Join us as we show you what is going on in the industry and what the experts are thinking about! In this issue we’ve prepared a number of interesting articles for you with our main headliner being an interview with Jonathan Benchimol, Director at Fogas in Brazil. We wanted to know just what exactly had allowed Brazil to almost completely eradicate illegal refilling. The mature market there has much to teach Africa about their success and we would be wise to listen. We also spoke to Kevin Robertson, CEO, LPG Safety Association of South Africa about the association’s work and its role in the South African LPG Industry. Kevin takes us on a crash course about the association and what it has been doing to improve the safety of the industry. Once again would like to thank everyone for their contributions and their support, this magazine would not be possible without you. Do continue to let us know more about what we could do better. Look forward to meeting and speaking with more of you at WLPG Forum 2015 in Singapore. Thank you.
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Ryan Pasupathy Editor
SEPT 2015 | LPG BUSINESS REVIEW | 01
FEATURES
CONTENTS 12
Clean Cookstoves Save Lives The LPG Revolution By Sumi Mehta and Donee Alexander
17
From The Perspective Of A Gas Retailer In Kenya; From Hunter To Hunted By Elizabeth Muchiri
29
Drowning In LPG By Rudolf Huber
INTERVIEWS: 09
Custodians Of LPG Safety In South Africa - Interview With Kevin Robertson, LPGSASA
22
The Brazilian Success Story - Making Illegal Refilling; A Thing Of The Past An Interview With Jonathan Benchimol, Managing Director, Fogas & President, AIGLP
ADVERTORIALS: 32
Gauging Excellence Rochester Gauges International
NEWS:
03
FGE CONFIDENTIAL: STATISTICS:
02 | LPG BUSINESS REVIEW | SEPT 2015
39
36
WORLD LP GAS NEWS INFRASTRUCTURE
Kaduna Refining and Petrochemical Company (KRPC) has resumed refining of petroleum products at 60% installed capacity just eight months after it halted operations due to lack of crude oil. It is hoped that the resumption of refinery operations will improve the supply of fuel in Nigeria and allow the country to make savings on refined fuel and other petroleum products such as LPG. -Business Day Total Oil India Private Limited (TOIPL) commissioned its new LPG unloading facility at Berth No 13 of New Mangalore Port Trust (NMPT). India currently imports almost 45% of its LPG with most importation facilities operating at full capacity. Demand is continuing to grow rapidly due to the better availability of LPG which is increasingly becoming a preferred fuel by both domestic and industrial users. -Deccan Herald Chingases Company Limited (CGC) intends to set up a LPG plant in Zambia at a cost of about US$220,000. CGC produces, develops and sells oxygen, nitrogen and acetylene gases, LPG and compressed air, among other services. -Zambia Daily Mail Zekarias Wolika, sales and marketing manager Libya Oil Ethiopia told The Reporter that after a week long deliberation, the management of the company has decided to make additional investments and expand its business in the country. - All Africa
INNOVATION The Petroleum and Natural Gas Ministry of India will launch its ‘SAHAJ’ online LPG connections to give more convenience to new LPG consumers. The new system would be available on the websites of each oil company and the government’s LPG portal, Pahal. The system will automatically detect a dealer best suited for the consumer and email or message a customer ID number within 48 hours of applying. -New Indian Express
SEPT 2015 | LPG BUSINESS REVIEW | 03
NEWS TRADE
East African economies are looking to benefit from increased trade with the rest of the world following the extension of the 146-year-old Suez Canal in Egypt. The regional block has been receiving growing volumes of cargo from 3.28 million tonnes in 2004 to 4.36 million tonnes in 2014 through the canal. -The East African Iran is considering raising LPG exports by an extra 2 million metric tons once the sanctions are lifted. New plants are coming into operation, including the Pars Special Economic Energy Zone, which has been established for processing South Pars oil and gas resources. -Press TV The Ministry of Minerals, Energy and Water Resources said that Botswana has been experiencing LPG supply disruptions due to the shutdown of some refineries in neighbouring South Africa these past few months. -Star Africa
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Zimbabwe’s energy troubles have been worsened by a sudden shortage of LPG due to export cuts by South Africa which is fighting to satisfy their own domestic needs of LPG as a result of the shutdown of their refineries for scheduled maintenance. -All Africa Oryx Energies says huge demand for liquefied petroleum gas owing to heightened load-shedding in Zambia has triggered shortages of the commodity. The Energy Regulation Board has pledged to act on pressing concerns raised by alternative energy players on the high import duty and logistical challenges they are faced with. - The Post, Zambia ERB executive director Langiwe Lungu, said the ERB would engage Government to waive duty on importation of LPG in Zambia to help cushion the prices of the commodity on the market which have skyrocketed due to high demand and weakening of the kwacha. - Times of Zambia
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NEWS AUTOGAS
Installation of gas tanks on cars in Thailand has dropped 50 percent for the first half of this year compared to the same period last year with the business for the whole year to be worth between 2,000-3,000 million baht compared to 6,000 million baht annually for the past several years. -Thai Visa News More than 2,000 vehicles powered by autogas are now on the roads in Maputo city and province, in Mozambique. The number of vehicles powered by autogas rose from 700 in 2013 to over 2,000 now. -All Africa The prices of petrol, diesel, paraffin and LPG in South Africa have all decreased with effect from Wednesday (02/09), the department of energy announced. The decrease is due mainly to the continued drop in the crude oil prices during the period under review. - News 24 Australian Orbital Corp is quitting its auto LPG businesses and setting up a technology incubator as the latest steps in the revamped board’s multi-prong growth strategy. - The West Australian Fijian consumers will be paying less for liquefied petroleum gas (LPG) and Auto Gas, but the price of gas is on the rise. Acting Minister for Industry, Trade and Tourism, Aiyaz Sayed-Khaiyum said: “Both changes are due to international market forces beyond our control.” - Fiji Sun
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NEWS LEGAL & SAFETY The President of the Women in LPG Global Network (WINLPG), Mrs Nkechi Obi, berated poor LPG usage in Nigeria, urging the Federal Government to create an enabling environment to encourage more investors coming into play with new filling plants and terminals. -Naija 247 News A court has temporarily upheld an application for a warrant of prohibitory injunction to be issued against the Malta Resources Authority, preventing it from suspending the distribution licences of seven LPG distributors. The suspension of licences was made for the absence of a condition prohibiting the plaintiffs from using stickers belonging to one company or another on their trucks. -Malta Today The newly formed Zimbabwe Indigenous Gas Dealers Association (ZIDGA) has appealed to Government to waive duty on LPG to promote its usage as an alternative source of energy. Duty on LPG is 5% while VAT of 15 percent is also charged. -The Herald
HOUSEHOLD USE More than 2000 Liquefied Petroleum Gas (LPG) cylinders and cook stoves are to be distributed to residents in the Savelugu/Nanton Municipality in the Northern Region of Ghana. It forms part of the Rural LPG Promotion Programme (RLPGPP), which seeks to address the challenges associated with the use of solid fuel. Two other districts, Gushiegu and Saboba, would also benefit from the project. -Graphic Online A national shortage of LPG in South Africa means people who switched their appliances such as geysers, stoves and heaters from electricity to gas to escape load shedding are back to square one. “The reason for the shortage is local refinery constraints. South Africa does not over-produce LPG, which is why we have to import,” Afrox SA spokesman Simon Miller said. -ioL News Brazil’s state-led oil company Petrobras said that it would raise the wholesale price of LPG by 15 percent, the first price adjustment for the essential cooking gas in 13 years. -Reuters
SEPT 2015 | LPG BUSINESS REVIEW | 07
INTERVIEW
08 | LPG BUSINESS REVIEW | SEPT 2015
INTERVIEW INTERVIEW WITH KEVIN ROBERTSON CUSTODIANS OF LPG SAFETY IN SOUTH AFRICA – LPGSASA LPG Safety Association of South Africa
LPG safety is an issue that is
commonly overlooked, if not, it is often under prioritized. The LPG Safety Association of South Africa (LPGSASA) sees to it that safety is upheld as a primary focus in the industry. The current head custodian of LPG safety in the region is none other than Kevin Robertson. Having joined the association 15 years ago, he became the CEO in 2014 and has since been leading the charge for the promotion of safe and efficient use of LPG. Kevin says, “It is important to make known the economic advantages of LPG and its role as a modern fuel that can enrich the lives of all its users.” He says that it is the LPGSASA’s focus is to ensure the sustainable growth of the LPG industry through compliance with best safety and business practices. We were interested to find out what exactly the association was doing for the industry. Kevin explained to us that the main activities of the LPGSASA are: • the provision of training of LPG installers to an ongoing point of competency and professionalism, LPG tanker/maintenance, • cylinder filling and other product safety related training; • administering the Safe Appliance and Cylinder Verification
Schemes in order to try and ensure that only compliant and verified products are distributed or sold in South Africa; • assisting the South African Bureau of Standards to establish and review national safety standards • and media liaison and informing and educating consumers on the safe use of LPG. Kevin says that there is little doubt if that the efforts of the association have had a positive impact on the industry. He explains that while the market has shown fairly strong growth, the number of reported incidents has shown minimal increase. From correspondence received through
calls and e-mails, he finds that it is very apparent that the consumers are far more aware of the standards and regulations governing the use of the product. He says that similarly, the awareness amongst certain industries such as the hospitality, insurance and property industries, to mention a few have has also increased substantially. A Focus On Safety Kevin says that since his time at the head, the association has become far more focused on the needs of its members and other industry players as well as trying to communicate with these players as frequently as possible so as to ensure that they
SEPT 2015 | LPG BUSINESS REVIEW | 09
INTERVIEW receive enough relevant feedback on market changes and conditions. He goes on saying, “Our focus on safety has intensified. This is evident in our recent move to premises which are better suited to practical training. Previously our training was strongly theoretical but this has now changed and all our courses have a strong emphasis on the practical elements. Ensuring installers are correctly and practically trained can only be of benefit to the industry and to consumers – existing and potential.” Training is an essential part of the development process of any industry. Upgrading the knowledge and skills of operating staff improves the level of the industry as a whole and has become one of the key functions of the LPGSASA. The association’s training courses range from 4 hour Legal Compliance Seminars to full 5 day installer and filling courses. A complete listing of all their available courses can be found on their website. All the courses are structured to ensure the familiarity and understanding of South African National Standard 10087 part 1 to 10, which encompasses the handling, storage, distribution and maintenance of LPG in domestic, commercial, and industrial installations. The Government & The LPGSASA Taking into consideration that on top of training, there are still many areas of the LPG value chain that need monitoring and enforcement.,
it would seem that the LPGSASA has its work cut out for them. All this seems like quite a task for just one association. We wondered if other than the LPGSASA, were there other regulatory bodies involved in monitoring and enforcing the South African Safety Standards? Kevin replied, “The Government department mainly responsible for safety is the Department of Labour. It is they who are responsible for the implementation, continuous assessment and, to a large extent, enforcement. The Local Authorities (Fire Departments) also play a critical role through their participation on committees which address safety standards as well as being involved in approving and/or authorising (or otherwise) plans, etc.” He added that the association operated under mandates from the Department of Labour which covered the Safe Appliance Scheme, the
Cylinder Verification Scheme and the training of installers and cylinder filling. He also mentioned that the association also participates in various technical committees which provide input into the standards writing arm of the South African Bureau of Standards (SABS). Kevin also said that the Department of Labour has been extremely supportive of the Association’s endeavours but he did remark however, “We do feel that more can be done to encourage the use of LPG, especially in light (pardon the pun) of our electricity supply and cost challenges.” When asked which areas he felt that the government could improve on, Kevin responded by saying that clarity on pricing structure would be beneficial to the industry. He also mentioned that enabling the process for import and storage facilities is of major importance, as is the supply of LPG, especially during the winter months. “There is a need for a licensing regime for the distribution network as currently a license is only required to purchase from the refineries, this makes control of the distribution network, from a safety perspective extremely difficult,” he stressed. The LPG Distribution Chain in South Africa The extremely difficult task means having to monitor the safety of the entire LPG distribution chain in the country which is quite extensive.
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INTERVIEW
Kevin explained to us that from production to end user there are quite a number of intermediary stops of which safety can be an issue. Major wholesalers access LPGas directly from the refineries and store it in bulk tanks at their various depots. From here, it is transported, either in smaller, transportable, bulk tanks or in cylinders of varying sizes, to distributors who in turn supply the various dealers – i.e. smaller outlets who supply filled cylinders to the public. In some instances, the wholesalers and/or the distributors may supply directly to large end users (often commercial users such as restaurants, malls, etc.). for industrial type applications the major wholesalers generally supply direct. The entire value chain operates under a set of safety regulations that are described in detail in SANS 10087 part 1 – 10 which have been developed through the participation between the standards writing authorities (SABS), the Department of Labour, the emergency services (fire departments), the LPGSASA and various industry players all providing input over an extended period of time. The standards and regulations are continuously reviewed and amended if and when necessary. Seeing as how these standards have been developed somewhat internally, we asked Kevin if there were any particular safety procedures
that have been implemented that are unique to South Africa? “None that immediately spring to mind - the SABS and Technical Committees make regular reference to international standards, regulations and norms, and as members of bodies such as ISO and the World LPG Association, we have access to most of the information we require. We do, however, ensure that these are relevant to South African conditions and requirements,” he replied. Kevin says that the part of the distribution chain that poses the greatest danger to LPG professionals lies with distributors who buy directly from the refineries but do not have their own depots (storage facilities) nor their own cylinders. “These companies/individuals then use cylinders owned by and maintained by responsible companies who would normally keep the cylinders safely maintained. The companies who illegally fill these cylinders neither maintain them nor ensure that they are correctly filled, transported, stored, etc. This is a major concern as poorly maintained cylinders, especially if they are also overfilled can lead to extremely hazardous situations,” he stressed further.
as it has been a major task but they were still firmly focused on training so as to ensure the industry maintains a high safety awareness and continues to operate safely and responsibly. He reiterated that the association aims to position LPG as the safe, efficient and acceptable alternative energy source. He believes that in so doing, the LPGSASA can assist in alleviating the drain on the electricity grid and alleviate energy poverty while simultaneously facilitating in the creation of more job opportunities. Asking him what challenges the industry was facing in South Africa, he responded by saying that the practise of the illegal use and filling of cylinders is a major cause for concern. “Because the industry is showing growth, it is attracting individuals and companies who wish to participate in the market without playing by the rules. This results in non-registered persons undertaking installations, appliances which have not been verified being brought into the market and similarly, cylinders which have not been verified being distributed/ sold. All of these practises can have a negative impact on the safe use of LPG,” he says. Kevin ended off the interview saying that ensuring that LPG professionals are correctly trained in safety is without a doubt, one of the most important aspects for the propagation and growth of the LPG industry globally. He told us that in South Africa, many, many people still have the perception that LPG is dangerous and every time there is an accident, irrespective of the cause this myth is further propagated. “It is only with the presence of properly trained, responsible professionals who abide by the standards and regulations, that will ensure all aspects of safety are complied with and that the perception of people can truly be changed,” he adds. (LPG Business Review)
The Future and Beyond Kevin told us that the LPGSASA is currently seeing to consolidation of the purchase of their new property
SEPT 2015 | LPG BUSINESS REVIEW | 11
FEATURE
Clean Cookstoves Save Lives The LPG Revolution
The Global Alliance for Clean
Cookstoves is committed to improving public health outcomes through scaling up the market for clean cookstoves and fuels, such as LPG. Founded in 2010, the Alliance is a public-private partnership hosted by the UN Foundation with an ambitious mission to save lives, improve livelihoods, empower women, and protect the environment by creating a thriving global market for clean and efficient household cooking solutions. The Alliance’s “100 by ‘20” goal calls for 100 million households to adopt clean and efficient cookstoves and fuels by 2020. Along with working to overcome market barriers for clean cooking solutions, the Alliance also funds research to
build the evidence base for the public health outcomes associated with widespread adoption of clean cookstoves and fuels. Household air pollution from cooking with solid fuels causes 500,000 child deaths each year from acute lower respiratory infections, including pneumonia, and a 90gram decrease in birthweight. Two recent Alliance-supported studies in Ghana and Nepal sought to examine the impact of LPG adoption on child survival and health. These studies are some of the first in which truly clean technologies are being evaluated, and they expect to measure the magnitude of health impacts that can be attributed to reduced air pollution as a result ofclean cookstove and fuel interventions, as well as answer
12 | LPG BUSINESS REVIEW | SEPT 2015
the question, how much can clean cookstoves and fuels reduce incidence of pneumonia in children? And, does using clean cooking technologies and fuels during pregnancy boost birth weights? The Ghana Randomized Air Pollution and Health Study is evaluating the impact of adopting clean cooking (clean biomass stoves or LPG) during pregnancy on birth weight and childhood pneumonia. This study seeks to determine the respiratory pathogens responsible for pneumonia infections in a sample of physician diagnosed severe pneumonia cases. This will shed important new light on which respiratory pathogens are most responsive to household energy interventions. The Nepal Cookstove Replacement Trial is a large, stepped wedge cluster randomized trial to assess the impact of replacing traditional open burning biomass stoves with an “improved” biomass stove with chimney or LPG on the incidence of acute lower respiratory infection (ALRI) and adverse reproductive outcomes in a rural population in southern Nepal. The initial findings of these studies are encouraging. Results indicate substantial reductions in exposure associated with the adoption of cleaner cookstoves and fuels. Moreover, researchers reported high rates of study compliance, and solid evidence that study participants were
FEATURE DESCRIPTION OF STUDIES GHANA
The Ghana Randomized Air Pollution and Health Study is evaluating the impact of adopting clean cooking (BioLite stoves or LPG) during pregnancy on birth weight and childhood pneumonia. This study seeks to determine the respiratory pathogens responsible for pneumonia infections in a sample of physician diagnosed severe on which respiratory pathogens are most responsive to household energy interventions.
NEPAL
The Nepal Cookstove Replacement Trial is a large, stepped wedge cluster randomized trial to assess the impact of replacing traditional open burning biomass stoves with an “improved” stove or LPG on the incidence of ALRI and adverse reproductive outcomes in a rural population in southern Nepal.
NIGERIA
The Nigeria study is a randomized controlled trial to assess the impact of replacing either traditional biomas stovess or kerosene with ethanol on birth outcomes. This study occurs in an urban population where the majority of women use kerosene as their primary cooking fuel. Because this study evaluates open burning, kerosene, and ethanol, it will have the ability to establish a dose-response relationship between measured pollutants (PM and CO) and birth outcomes.
actively using the intervention stoves. More in-depth results on the health impacts will be released in the coming months. However, understanding the health benefits of adopting clean cooking is only one piece of the puzzle. The health benefits cannot be realized without populations’ widespread adoption of clean cooking solutions. For this reason, the Alliance has partnered with USAID TRAction to jointly fund research to examine the drivers of adoption—what fosters
Principal Investigators D Jack, Columbia U and KP Asante, Kintampo Health Research Center Technologies Assessed Open fire, BioLite stove, LPG
Principal Investigators J Tielsch, Johns Hopkins U and S Khatry, Nepal Nutrition Intervention Project Technologies Assessed Open fire, Envirofit chimney stove, LPG
Principal Investigators S Olopade, U Chicago and O Ojengbede, University College Hospital, Ibadan Technologies Assessed Open fire, kerosene, ethanol
an environment where people are willing to adopt clean cookstoves and fuels? Two of these studies are looking specifically at the adoption of LPG stoves. The University of California, San Francisco (UCSF) will partner with the Universidad del Valle de Guatemala (UVG) to conduct research, jointly led by Dr. Lisa Thompson (UCSF) and Anaité Diaz Artiga (UVG), in peri-urban Guatemala. The research will focus on LPG stoves distributed by
Sample Size 1415 Outcomes Measured Birthweight, Chilhood pneumonia
Sample Size 4200 Envirofit in Phase 1; 1900 LPG in Phase 2 (randomized from Envirofit group) Outcomes Measured Adverse pregnancy outcomes, ALRI
Sample Size 300 Outcomes Measured Birthweight, intrauterine growth restriction
GenteGas, a Guatemalan social enterprise that trains women to sell stoves and LPG and provide educational outreach. The goal of this research is to evaluate household air pollution awareness and behavior change as a result of GenteGas educational campaigns, as well as to assess sustained adoption of LPG stoves. In Ghana, the Kintampo Health Research Center, along with partners from the Mailman School of Public Health at
SEPT 2015 | LPG BUSINESS REVIEW | 13
FEATURE
KEY FINDINGS Initial Results Point to Increased Adoption, Reduced Exposure, and Likely Health Benefits Preliminary findings presented at the Child Survival Workshop in Nepal show that study participants are willingly adopting new stove technologies: • • • • •
Women in the studies prefer to cook with cleaner stoves and fuels. When clean stoves and fuels meet cooking needs, there is litle need for continued use of open fires. Study participants are willingly displacing traditional stoves with cleaner stoves and fuels. Studies report high rates of study compliance, and solid evidence – sup ported by Stove Use Monitors (SUMs), which indicate when a stove is in use – that participants use the intervention stoves almost exclusively. Over 80% of the intervention participants in the Nigeria study gave away their kerosene stoves, and now rely exclusively on their clean-burning ethanol stove to meet their daily cooking needs.
Results also indicate substantial reductions in exposure associated with the adoption of cleaner cookstoves and fuels. •
While studies cannot ‘break’ randomization at this poin, major shifts in the distribution of exposures to air pollution have been observed.
Measurable child benefits of adopting clean cookstoves and fuels are expected. •
Preliminary results indicate signficant improvements in children’s health indicator and outcomes, even after controlling for major covariates like changes in vaccine coverage.
Columbia University, will assess the adoption of LPG stoves distributed by Ghana’s Rural LPG Program, which promotes LPG use in rural populations. Principle investigators Drs. Kwaku Asante (Kintampo) and Darby Jack (Columbia) will work together to evaluate characteristics of households that may predict LPG use, as well as facilitators and barriers to sustained use of LPG and the adoption of clean cooking technologies. At the July Second Africa LPG Summit, held in Nairobi, Kenya, the Alliance highlighted the need for cleaner cooking fuels as a way to address health issues. The meeting was an ideal venue for the Alliance to continue its
commitment to working with key partners to demonstrate and evaluate the public health benefits of scaling clean fuels. Focusing on Kenya as a case study, Alliance East Africa Market Manager Daniel Wanjohi made a plenary presentation, Introducing Models for Improved Supply, Distribution and Adoption of LPG. His talk addressed barriers to LPG adoption, an LPG delivery system framework for the base of the pyramid, principles for an effective delivery model, designing an LPG delivery model, and demand forecast scenarios. Also at the Summit, the U.S. Centers for Disease Control and Prevention, the Global Alliance
14 | LPG BUSINESS REVIEW | SEPT 2015
for Clean Cookstoves, the Global LPG Partnership, the Petroleum Institute of East Africa, the Kenya Medical Research Institute, the World LP Gas Association, and the Public Health Institute convened a workshop, entitled “The Role of LPG in Achieving Clean Cooking and its Benefits to Health: Promotion, Scaling and Marketing of LPG.” Participants from Ghana, Kenya, Tanzania, Uganda, Guatemala, India, the United States and the European Union discussed how LPG and other demonstrably clean cooking solutions, which can provide substantial public health benefits in Africa, particularly with respect to child survival. The workshop highlighted the considerable momentum within the African LPG sector and paved the way for active partnerships between the public health and LPG sectors needed to advance the scaling of LPG for clean and safe cooking. Panelists also emphasized the importance of engaging other key players, including women’s self-help groups, development agencies, and relevant civil society organizations. It is exciting to see adoption of clean fuels, such as LPG, gaining momentum around the globe. Supporting researchers building the evidence base to demonstrate the public health benefits of clean cookstoves and fuels, and working with partners around the globe to break down barriers to adoption, the Alliance continues our commitment clean cooking solutions, and ensuring that cooking doesn’t kill. By Sumi Mehta & Donee Alexander (LPG Business Review)
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FEATURE
FROM THE PERSPECTIVE OF A GAS RETAILER IN KENYA; FROM HUNTER TO HUNTED
A Retail Outlet selling Cooking Gas in Kenya
Lucia, an LPG retailer in
her late 50s, stood outside the metal grill door to her gas shop as she watched the unbranded white truck slow down and make a left turn to her shop. The driver manoeuvred the vehicle and parked in the usual manner; door facing the shop and leaving ample space for offloading the full cylinders before the quantities are verified and moved inside the store. It was a cold August
morning, and Lucia was alone in the shop. Her only employee, who doubled as cylinder handler and delivery man, had already left for the first delivery within the estate. As soon as the vehicle stopped, Abdi, the sales executive, jumped out from the front seat. Abdi, 26, was a graduate of University of Nairobi, and had worked as a sales executive for Pika Gas Company* (company name has been changed for anonymity)
for three years. His demeanour was rather deceptive; calm and collected, almost introverted. Yet, he was very persuasive with customers and always met his targets. His dream was one day to become a leading transports, owning a fleet of trucks that would distribute gas to the whole country. “Check these� Lucia said, immediately after preliminary greetings, pointing to a group
SEPT 2015 | LPG BUSINESS REVIEW | 17
FEATURE of assorted cylinders she had isolated outside her shop. Abdi counted the cylinders. There were fifteen 6kg cylinders and seven 13kg cylinders. He immediately isolated three cylinders of one brand (all of them 6kg size) and told Lucia he had been instructed not to take that brand. Apparently, the company that owned that brand had not paid Pika Gas for previously collected cylinders. (A legal requirement in Kenya allows customers to buy branded gas by exchanging empty cylinders they hold with any available or preferred brand. The brand owners are not allowed to fill brands belonging to other marketers, and instead exchange them for their own brands or are paid if they collect more of one brand than the other company had exchanged. Some new companies fail to surrender the
collected cylinders and therefore end up owing their competitors money when the competitors deliver the formers’ cylinders. If the payment is delayed, then some companies refuse to accept empty cylinders from those other companies so as to avoid increasing risky debt.) Abdi picked up each of the remaining twelve cylinders to individually inspect them. He had to check for genuineness of the brand, cylinder painting, and the last test date. When he came to the 13kg cylinders, he found one which was last tested in 2005. He also isolated it, as it had exceeded the eight years requirement. He then asked Lucia if she had other empty cylinders to make the original quantity. Lucia declined, stating that she needed to keep those for a leading Oil marketing company that was to make a delivery later in the day. She always bought a few cylinders
Empty Cylinders Corner
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for those customers who insisted on buying old and established brands. Abdi calculated the amount to be paid and asked Lucia to pay. Depending on available ‘float’, she could pay either by MPesa (a mobile-phone based cash transfer method which was the standard payment method in Kenya) or funds transfer from her agency banking. Abdi’s company had opened accounts with several banks such as Equity, KCB and Co-op Bank. In addition to having branches countrywide, these banks opened agencies with small shop owners where their customers transacted as if they were in a bank. Lucy was an agent for all these and other banks. She showed Abdi the transaction number on the mobile phone, and he recorded the number manually on the cash receipt. Abdi and the driver then offloaded the corresponding number of full cylinders, quickly loaded the empty cylinders and bade Lucia good bye, as they hurried off to the next destination. As the truck re-joined the main road, Lucia pondered the changes in the gas retail business. Only a decade ago, she used to beg gas companies for her requirements. She had to deposit cash in the company’s account before going to collect her filled cylinders. The procedures in the company depots were slow, and sometimes collecting gas was a whole day affair. Furthermore, she could only buy a prescribed minimum quantity of any given brand, limiting the number of brands she could fully stock. Lucia had started in the LPG business unintentionally. Owing to the frequent gas shortages experienced then, she had started buying gas for her neighbours using her station wagon vehicle. Since the public buses would not allow gas cylinders, she would buy gas from the nearest station when it was available. Later, she and the neighbours agreed she could buy gas from other gas stations whenever
FEATURE Weighing Scales
it was available, to ensure none of them lacked gas. Soon, she started chaining the cylinders outside her kiosk for neighbours to see when gas was available. Customers wishing to buy gas would bring an empty cylinder of the same brand. She was not keen on selling cylinders as getting a new cylinder was difficult. Since gas companies only sold new cylinders infrequently, and she did not want to miss cylinders for refilling, or even the quantities as one had to have a minimum quantity to buy in the depot. Later, a leading gas marketer revolutionalised the gas market with the introduction of an affordable and easily moveable 6kg cylinder. In the next couple of years, at the start of the millennium,
there was a sudden increase in companies selling gas. She visited them and opened accounts with every new company, buying the minimum quantity. Soon, she put a sign outside her shop “ALL TYPES OF GASES AVAILABLE�. Never mind that the gas was all LPG, and it all came from the same refinery. She also bought five different types of LPG regulators to go with each of the LPG brands. Luckily, two sets of brands could use the same regulator and she did not have to buy an individual regulator for each of the brands. In 2009, the cylinders were standardised. Although the standard sizes were 1kg, 3kg, 6kg and 13kg, she decided to concentrate on 6kg and 13kg
sizes. Every brand owner had sold her regulators to sell to customers buying the 13kg cylinders with the old valve, and she was to advice customers accordingly. It became apparent that most of the new cylinders introduced in the new millennium already had the standard valve, and only a few brands needed to change. During the transition, she had to ensure her sales person, who doubled as delivery man, advised customers on the changes. The new entrants had posed a challenge. Her initial intention was to stock all brands. However, collapse of two brands which had been well advertised and which customers had bought before and had left a bitter taste in her mouth. She had cylinders which no company wanted to take. Those of her customers who had bought these new brands were left with useless cylinders they could not exchange or even get in the market. A few came back to her and bought new cylinders, telling her they managed to sell the cylinders to road side traders. She could not sell the cylinders to the roadside traders as they paid a low price and could only buy one or two cylinders from desperate housewives, not the fifty or so she held in her store. She kept hoping someone would buy the old brands and she can off-load the cylinders. In the meantime, they remained stacked in one corner of her small store. Pika Gas company, or Pika, as the company had become popularly known, was only three years old in the business of cooking gas. Pika had started door-to-door deliveries targeting all gas retailers, and would sell any quantity of gas the retailer wanted, unlike the older companies that sold a minimum quantity and asked customers to collect from their depots. Moreover, Pika accepted payment in various forms such as Mpesa and other mobile money transfers
SEPT 2015 | LPG BUSINESS REVIEW | 19
INTERVIEW to Pika account. After the collapse of two brands within five years, Lucia became reluctant to take new brands. Abdi had literally left her a new cylinder of Pika gas when he introduced the brand, and had made several visits to her shop without her buying. When it was bought the same day, she decided to start buying, and had since become a regular customer who began buying three to four times a week. Pika brand became one of the more popular brands in a short period, overtaking brands which had been in the market for over a decade. In the last decade Lucia also faced intense competition. While initially her competition was from the petrol stations three kilometres away but now, gas resellers had mushroomed all over. Within her residential estate, other resellers started selling and even making home deliveries. She too invested in a bicycle and trained her sales person how to check and connect the accessories. She also embraced mobile-phone based banking, and was now an agent for over five banks. The banking agency fees supplemented Lucia’s income as the gas margins declined due to the intense competition (there were over twenty five brands), from the supplying companies and many illegal refillers tended to sell at much lower prices than the recommended prices. Lucia had decided to stick with established brand owners and only bought her gas supplies from brand owners.
Filled Cylinders
Her mind shifted back to the three cylinders that Abdi had declined to pick. She would incur a huge loss if the other gas marketers rejected that brand of cylinders. Apart from her own stocks, there were customers who had already exchanged other brands. If she took the exchanged cylinders for these customers, she would only increase her dead stock. If she refused to exchange, the customers would be unhappy with her. In the past, customers had demanded their
ELIZABETH MUCHIRI
Lucia and Abdi are clients of Elizabeth Muchiri and this is an account from her conversations with Lucia. Elizabeth is a consultant in the LPG sector in Kenya. She worked at BOC Gases for many years, before she joined National Oil in 2008 and launched start-up LPG company, Green Energy Ltd. Since 2013, she have been consulting and helping clients get into LPG business.
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original cylinders back, yet she had already given back those cylinders to other companies. She wondered if it was better during the days when she was exchanging specific brands, or if there was anything that could be done to protect retailers and consumers when brands collapsed or were suspended. Could other marketers buy those cylinders? Should there be a body that takes care of consumers in these cases? Theoretically, she knew she had to sell ten or so refills to cover the cost of a gas cylinder. Idle cylinders created a deep hole in her business, wiping away her profits. She had to take some quick action before her store was full of dead stock. Lucia and Abdi are not alone in their struggle, they are but one gas retail shop of many. By Elizabeth Muchiri (LPG Business Review)
3RD ANNUAL
AFRICA LPG SUMMIT 2016
18 – 20 July 2016 | Dar Es Salaam, Tanzania
REMOVING BARRIERS TO LPG GROWTH AND DISTRIBUTION IN AFRICA
to be held in conjunction with:
CNG AFRICA FORUM 2016 Back for the 3rd year, the Africa LPG Summit is the go-to event for the LPG industry in Africa to catch up with the latest developments, network with industry leaders and get exposed to the newest technologies and practices available. KEY TOPICS TO BE ADDRESSED INCLUDE: • Updates on market developments from key African Demand Centers including Nigeria, Sierra Leone, Zimbabwe, Rwanda, and more! • Tackling the lack of infrastructure and getting more people to invest in LPG development • Incorporating health as a key consideration for LPG development ORGANISED BY:
MAIN SPONSOR:
FOR MORE INFORMATION: VINCENT CHOY T: +65 6506 0986 F: +65 6749 7293 E: vincent@lpgsummit.com
T: +65 6506 0965
F: +65 6749 7293
E: info@lpgsummit.com
W: www.lpgsummit.com
INTERVIEW THE BRAZILIAN SUCCESS STORY
MAKING ILLEGAL REFILLING; A THING OF THE PAST Interview with Jonathan Benchimol Managing Director, Fogas & President, AIGLP
28 years is a long time to
have been in the same industry and it is no wonder why Jonathan Benchimol, MD of Fogas and President of the AIGLP, says that it is not a question of where his passion comes from but how can it be that someone not have passion when working in the LPG industry? It is also clear that his passion is shared by many seeing that AIGLP (Ibero American LPG Association) was formed 29 years ago with some 20 Latin American Companies being a part of the association since its inception right up till today. He says that this shared passion is due to the difference that LPG makes to the lives of the country’s populace. He went on to explain that there are close to 2.5 billion people on the planet that are still cooking with either solid fuels or kerosene and that the shift away from these fuels to LPG will represent a drastic improvement in the living standards of the people. “How can a worker not feel motivated working in the LPG industry? It’s about the quality of life – It’s about making a difference
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INTERVIEW in the world. LPG is a superior product when compared with solid fuels,” he remarks. Adding to this, he goes on to say that the use of LPG improves air quality by reducing emissions which improves population health and makes people’s lives easier by reducing their workload and preparation time - not to mention that more often than not, collecting of firewood is carried out by children. He points out that this effectively reduces deforestation and makes it possible for children who would be collecting wood, to now have time to attend school and make a better future for themselves. One for the History Books Brazil has been extremely successful in the development of its LPG industry and serves as a brilliant example for other nations to try to emulate. There are significant differences from country to country but Brazil is a prime example of how things can turn out when done properly. A 78 year old industry in its own right, it is not a case of overnight success, and Jonathan says that his 28 years of experience have only given him a window into a small portion of the evolution of the industry. He attributes the country’s success to extremely competent people who put in the time and effort to shape the industry to become what it is today. “I believe that there is no
Jonathan Benchimol
single factor for a success story, it is a combination of factors which involves hard work, commitment, good government policies, intelligent industry players and of course, the key element of luck for true success,” he says. Looking more closely at the issue though, Jonathan did say that if he were to mention a few key points, there were some possible things that he could single out. First being entrepreneurship talent – the first industry players saw LPG as the future in a world in transformation and it was important enough to work very hard to make the supply available even though there was no local supply. Second being a ‘customer oriented focus’ – meaning that the industry would be focused on fulfilling the needs of the customer. Third being government political desire and commitment – to see through a few decades to make LPG the fuel of choice for the household sector through public policy on product price subsidy. Fourth being the visionary mind of the industry – understanding that due to customer disposable income limitations, cylinders and other appliances needed to be sold in instalments so that they could generate LPG demand which would substitute solid fuels. And lastly, a capable industry workforce. Effective Policies Policy makers have a huge part to play in the planning and implementation stages of a developing industry and in Brazil it
was no different. Just how effective was the government in performing these roles? Jonathan says he believed the government was very effective in its decision making process, and that government always plays a key role in turning any industry into a successful one. He states that “Every industry needs regulation to turn the game on an even level playing field. Regulation however, needs to be modern, customer oriented, dynamic and stimulate competition – this does not mean excess regulation or bureaucracy though.” Jonathan adds, “Besides regulation, standards are also important (cylinder manufacturing, LPG dealers, bottling stations, recertification of cylinders, etc.) but more than just creating regulation, it is the way regulation is made. All regulation during the decision making process should be made transparent and democratic to the society – any person should be entitled to express an opinion regarding regulation and that by making this transparent, the government can search for the best solution that meets the needs of the society.” As an important part of this implementation process involves the issue of market penetration, especially since there were many types of solid fuels that were already being used in homes across the country, we asked Jonathan exactly how the government went about
SEPT 2015 | LPG BUSINESS REVIEW | 23
INTERVIEW tackling this issue. “In Brazil, LPG market penetration (introduction and early growth stage of product life cycle concept) was very limited because there was a limitation on supply of LPG, infrastructure, cylinders, filling stations and availability of credit among other things,” he says. He mentioned that the sociology of fuel substitution was a key restraint. Customers used other fuels for cooking and there it was the common consumer perception that the current product (solid fuels) was ‘sufficient for my needs’. This therefore led to LPG distributors working very hard, house by house, customer by customer, explaining the benefits over solid fuels. “I believe that a game changer and a key turning point was when companies offered a free test period to customers,” he asserts. He explains to us that the LPG distributors made stoves, cylinders and other equipment which were then loaned out at no cost for the customer for 3 days while at the same time also installing and teaching them how to use the full LPG set. At the end of the 3 days, they would return to collect the stove and the cylinder if the customer did not want the new product. He remarks that what was not entirely surprising was that when the distributors returned
to collect the equipment, the majority of customers said that they did not want to give it back and that they were more than happy to use LPG instead. “A second game changer was that when the companies returned to the household, most customers wanted LPG, however, they had a disposable income limitation,” he says. This resulted in the distribution companies coming up with the solution to supply ‘credit’ to customers by selling the LPG set to them in instalments. Jonathan says that he believed that in the introduction and early growth stages, this was truly a game changing solution of top quality entrepreneurship skills. “The third game changer was when the government understood that LP Gas “the fuel of choice” was in the best interest of society,” he says. The government then introduced a product price subsidy to make LP Gas affordable to all. This made the substitution process faster and LPG became the fuel of choice for the household sector rapidly reaching 95% market penetration. We ask Jonathan if he feels that should the Brazilian government start over, what could the government do better this time? He
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responds somewhat matter-of-factly, saying that “In a decision making process it is an unknown factor and to say which decisions not taken what would have been the actual impacts and results, is unclear.” He does comment, however, saying that looking back at the industry he believes the product price subsidy on LPG should have been taken out earlier compared to when they did. He cautions however that this is subjective matter and this is just his opinion on it. The problem with subsidies is that they can eventually become a burden; Brazil has managed to repackage their subsidy plan as a family/household reimbursement plan. We were curious as to why this was done and what exactly were the advantages of doing this over a subsidy plan. So once again, we asked him. He replies saying that “Every decision has a benefit and a cost. It is in the best interest of society when the decision making process generates more benefits than costs. In the case of the product price subsidy it clearly represented a benefit to society but also a burden to society. It is very hard to carry out the fine tuning to a point where the benefits outweigh the costs. I believe that if a subsidy is created, the key factor should be to establish
INTERVIEW targets and objectives. When those targets and objectives are reached, it is necessary to then phase out the subsidy because objectives have been achieved. It is also important to make the subsidies transparent and known to society and also to be sure the subsidy is accountable.” Jonathan continues to explain saying that in the case of Brazil he believes that the target and objectives on market penetration were reached in the early 80’s, however the subsidies were only phased out in the early 90’s. He says that it is a very tough political decision to phase out subsidies. However, when the cost outweighs the benefits it should be done even though it may represent a political burden for politicians and government authorities. “It is important that the decision making should represent society desire and in the best interest of society. Maintaining the subsidy after the objectives have been reached will benefit a portion of the population that do not need a subsidy and it may lead to incorrect allocation of scarce resources,” he stresses. “In Brazil the industry was able to explain the concept to government authorities and the solution implemented by government was to withdraw the product price subsidy, however, doing this through a cash transfer policy to low income households based on a government database. Therefore, the economic and financial impact was partially offset. The Brazilian cash transfer project deposits a certain amount of money into a bank account and the person can go to the bank and withdraw the cash. The person must be in the low income household government database to be entitled to the benefit. The Brazilian model has no guarantee that the money received by the low income household will be used to purchase LPG. Some argue that this is a drawback of the project and others argue that this gives the customer the entitlement to make a rational choice of where to allocate
the money received. Therefore, it requires a value judgement that is left to each individual reader to make his or her own value judgment,” he says. Property Rights One point that Jonathan reiterates time and time again is that the most important factor of any LPG industry is property rights and he also says that it is not only the most important factor for the LPG industries alone but also for any other industry as well. This representation of property rights is what is referred to as the ‘brand’. Looking more closely at this concept of brand and who are the actual beneficiaries of this representation of property rights Jonathan goes on to say, “I believe that the more complex the purchase process is and the greater the complexity of the purchase, the greater the benefit of brand.” Why, you ask? Jonathan says that we need to take a closer look at the LPG industry. It’s a fact that the average customer purchasing a cylinder has limited knowledge on its chemical properties, physical characteristics, metallurgical properties (thickness of steel, strength, cylinder testing, etc...), and on metrological matters. This therefore makes an LPG purchase a complex decision making process much like when making the decision to buy a car, refrigerator or an apartment. So how does the customer solve this equation? Does he spend hundreds of hours trying to understand the chemical properties of LPG – Jonathan does not think so. His conclusion is that the customer will make his decision based on the brand. He feels that the customer will trust a specific brand because he knows that the company he decides on has made all the complicated decisions for him and also that, should anything go wrong, under his expectations, he has a guarantee. This makes the customer the greatest beneficiary of the brand because it makes his whole
decision making process that much easier - he only needs to research the brand. It also entitles the customer to be able to switch brand should anything go wrong with the brand that he has chosen. “Simply put, the brand empowers the customer.” Jonathan goes on to explain that the other economic agent that benefits from branding is the government and the authorities. He says that brand gives the government the power to access responsibility and makes economic agents accountable for their actions. “Brand makes the government’s job easier,” he says. “In an unbranded market, where does the customer find a solution for his problem? How can the government access responsibility for a product or for a service problem? Who is to blame?” he asks. Last but not least, Jonathan adds, “Brand is in the benefit of economic agents because competition will be fierce in product, service, quality, market, cylinder, etc. Brands also turn the market into an even playing field, provided that there is enforcement of the law, as well as stimulating innovation and product R & D. Brand also stimulates efficiency because companies will search for best business practices and it will also stimulate investment. Operators will learn to focus on customer satisfaction - a branded market (with enforcement) reduces the free rider concept.” Upon slowly realising the dire importance of property rights, we begin to wonder, is branding a onefits-all solution for any market? We asked Jonathan what he felt would be the best course of action to implement branding in an unbranded LPG market in the growth stage such as Nigeria and Zimbabwe. “Let me explain that every country should reach a solution that best meets the desire of the society. There is no silver bullet solution. And I do not wish to make value judgments on any country model,” Jonathan responds.
SEPT 2015 | LPG BUSINESS REVIEW | 25
INTERVIEW
“I believe that in the long run an unbranded market will face severe limitations because of the free rider concept - Why should the economic agents invest in new cylinders if other companies will fill the new cylinders? Why will a company carry out maintenance on a cylinder if others are going to use it for free? Why do cylinder recertification if others filling companies will fill the new cylinders?” he questions again. “Branding is a choice - countries that operated in an unbranded market like Colombia and Uruguay migrated to a branded market after understanding the benefits,” he says. As to whether or not it is possible to switch from an unbranded market to a branded market, Jonathan replies with stoic confidence, “Yes it can. The first and greatest misconception that I hear is that a country that started in an unbranded market cannot change to a branded market. This is an incorrect principle. It most certainly can! It’s just that it requires political will and the desire of society. There are countries that have made that switch. It is important to point out that it is not a trouble free migration, there are problems but they are manageable.” Jonathan goes on to explain that if a country, through a democratic and open political process chooses to change its model from unbranded to a branded market, it is his
recommendation that a group of industry leaders is created through a negotiated process to reach a ‘win - win solution’ and come up with monthly and yearly cylinder phase out processes. He says it is also necessary to create a cylinder standard and that every new cylinder injected into the market be branded. There will be problems during the implementation process but it can certainly be done - this has been done not only in shifting model. Some countries have even decided to change every valve in every cylinder in order to stimulate competition from industry agents and this was done in a successful way through a negotiated process. “Anything can be done. It just requires that the industry players take out of their ‘mind model’ that it is impossible.” Law Enforcement Illegal refilling has a direct correlation to the number of safety related accidents. This has been corroborated by numerous countries that have the statistics to show for it. Upon moving from an unbranded market to a branded market – there is a visible reduction in the events of accidents and death. It is another reason why eradicating illegal refilling is so very important to
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the industry. An important part of trying to lower incidences of illegal refilling and associated accidents is enforcement. It is good for a country to develop appropriate laws to tackle illegal refilling but if these laws are not enforced – the objective is lost. Just how important is enforcement? Jonathan says, “Some countries have branding regulation but lack enforcement of the property rights. Brand is a necessary condition but not a sufficient condition for success. Without enforcement some agents will understand that the benefit of acting as a free rider outweighs the cost. Therefore, cross filling and illegal filling will occur. Without enforcement of brand, the market is not an even playing field and competition will not maximize customer satisfaction.” Jonathan then goes on to speak of the philosophical side of things to try to explain why enforcement is absolutely essential in this case to act as a deterrent. He speaks on the musings of Sir Edwin Chadwick, a prominent English social reformer of the 19th century. He makes use of the words of Chadwick in his paper - Economies of Crime, to further elaborate in the answer. “According to Chadwick, the criminal agent acts as a rational agent. It perceives the crime as a
INTERVIEW
source of income and believes that the benefits outweigh the cost of the crime, which is why they commit the crime in the first place. Chadwick goes on to say that before a criminal commits a crime he makes a value judgment based on the following 3 issues: 1. What is the probability of being caught? 2. What is the probability of being prosecuted for the crime caught? 3. What is the probability of facing punishment for the crime? “Therefore if there is no enforcement of the law and regulation, some agents may perceive that crime does actually pay for the simple reason being that they would get away with the crime if they did it – there was no consequence for wrong doing.” In Brazil, Jonathan says there is proper enforcement of the law. Several government agencies are tasked to carry out regular inspections on companies. Brazil takes a very hard stand on illegal refilling - In Brazil, illegal filling generates a punishment in a civil court; not only a monetary penalty but also the companies are prosecuted for violating government rules and regulation. If the problem occurs continuously the government can shut down the company after the due legal process is concluded. Jonathan says that even once
the company is closed, company partners are not permitted to engage in this industry for a few years following its foreclosure. We ask Jonathan if he feels this stance is applicable to emerging LPG markets in other countries, considering that enforcing such harsh punishments could scare away potential gas suppliers. He replies saying simply, “Once the cost of an illegal activity outweighs the benefit, no economic agents will see the benefit as being a free-rider on the market.” Cylinder Rehabilitation Brazil has the largest LPG cylinder rehabilitation program in the world; everything is very advanced at their refilling centers - much of the processes is automated and some filling stations process what looks like thousands of cylinders each day. The operations are carefully monitored by trained staff who oversee each step in the refilling and rehabilitation process before the cylinders are loaded onto trucks to be delivered back to homes all across the country. Every cylinder is inspected during the filling process. A cylinder can be rejected from the filling line based on a visual standard based on NBR 8866 and NBR 8865 (Brazilian standards) and also based on the cylinder age. Jonathan tells us that “The standard for age (in a new cylinder) is the first recertification cycle which is fifteen years and once the cylinder
has been recertified the first time, an additional recertification is done every ten years thereafter. This is the current Brazilian standard.” He goes on to add that he believes cylinder recertification is a successful program because there is a respect for property rights. He says companies know that the investment on the cylinder will generate safety and customer satisfaction and also that no other agent will use the recertified cylinder, this makes companies feel accountable for their cylinders. “I believe in a model of an unbranded market that a recertification of cylinders will not reach full success because agents have no assurance that the investment made in cylinders will generate customer satisfaction for the company after the first transaction because other agents may use that recertified cylinders.” The Future As we bring the interview to a close, we ask Jonathan what he feels the future holds for LPG in Brazil? He responds saying that “Unfortunately Brazil has a legal limitation on LPG use and its applications. It is also a mature market and has had full market penetration on the household market. The future and growth lies in the government deregulating the market and letting LPG compete with other fuels on an even playing field and letting the customers purchase the fuel that best meets this value proposition.” There is much that can be learned from Brazil’s success and with the knowledge and passion of people like Jonathan, perhaps more nations will be able to drive and develop their LPG industry in a similar manner and more people can benefit from the wondrous properties of this clean and environmentally friendly fuel. (LPG Business Review)
SEPT 2015 | LPG BUSINESS REVIEW | 27
FEATURE
DROWNING IN LPG
Anyone
checking regularly on the oil price must blush from time to time. One of the consequences of the lower oil price is that the world is currently drowning in other oil related products as well and there is worse to come as some of those effects spill over onto the non-oil patch. Fast focus on LPG. It’s a mix of essentially two different hydrocarbons .... What do I say; you are all pros of the business so I skip the blather. One of the most exciting developments is concentrated in North America. Yes, we all know the stories of the US becoming the next LNG superpower. LNG is methane gas that has been cooled to minus 161 degrees Celsius so so it becomes liquid and then it is transported in huge tankers (some of them have domes as tanks) over the oceans. LNG gets all the limelight and
the great attention (plus the big bucks) today but what is happening with LPG is no less thrilling. Already the very first shale drillers knew that the resulting gas was very wet depending on the formation which means it is high in Natural Gas Liquids. This has by now gone all the way to oil which has become the really sought after resource - gas has transformed from the stuff those drillers went for to be the sidekick today. This means that essentially, shale drillers respond to what happens in the oil market and deal with the rest as consequences. That’s not very different from classical oil drillers that have drilled for oil and flared gas for ages. LPG is one of those consequential products. The rationale is that the prized commodity gets all the attention and the sidekicks are here to
improve cash flow at best - at worst they are a burden to the balance sheet. In the last 10 years, the US has transformed from an importer of LPG into one of its biggest exporters. The North American continental market is oversupplied to the point where storage is bursting at the seams and traders lack sufficient capacity to game the market properly. Gaming requires overcapacity and North American LPG is hitting tank tops and capacity constraints on the transmission grid. Export has gone from being a theoretical possibility to becoming a lifesaving necessity for drilling to continue. If the US shale producers cannot export and the domestic market cannot absorb the volumes anymore, they will be stranded with huge volumes of LPG which essentially means dumping it for free on the market
SEPT 2015 | LPG BUSINESS REVIEW | 29
FEATURE in order to free up capacity as otherwise they would have to shut down upstream capacity. This is neither very easy to do nor is it economically sound. Cannot happen? Just remember what happened to the sulfur market when the Qatari super-trains started up. The price for sulfur in India (a big sulfur market) went negative for some years which means the Qataris had to pay to get rid of the stuff. So the pumps have to keep pouring oil and hence will continue swamping the LPG market at the part of the world and this ripples through into the entire Atlantic Basin as this is the market on the doorstep. Fortunately for the US, the biggest import market in Asia - China - had just built some new petrochemical plants that can sure make good use of the produced LPG. It’s cheaper than Naphtha so it’s clear where LPG should head to. But China shows strong signs of running out of steam as an economy. The currency has been devalued and the stock market is in tatters and there is a strong feeling that China’s time in the heavens might be finally over. This downturn
does not look likeit could be short term. Meanwhile, in Saudi Arabia, ethane has been used for ages as feedstock as it was plentiful and cheap. But it’s being replaced slowly by Propane and Butane as they are better feedstock for Petchems. But Qatar and the Emirates have built up massive Petchem industries as well as they also wanted to climb the ladder of the value chain. And much of this Petchem is flooding markets in Asia and in Europe. It’s another deluge of sorts. And all this massive oversupply in everything meets markets that are in decline. Yes, there are growing markets out there but they tend to be tiny in comparison to monsters like China. We come to realize that China has not been very honest on its growth figures for quite a while and even if we should have been aware of them cheating, we did not want to believe it as our own projections for - everything depended on them. Let’s be clear on one thing. The world could not sustain breakneck growth forever. One day those not stratospheric but rather spatial projections had to
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be exposed for what they are. Massively overblown. Now the world is in shrinking mode and given how long we have been on the growth drug, it’s going to take a little while. It must also be clear that if monster markets the size of China cut back one single percentage point in energy use, this means companies going out of business. None of the currently strongly growing markets can possibly absorb that overhang. We can also climb the ladder as much as we want on the value chain, one day someone will have to buy and use all the stuff that the world wants to churn out not in order to make money but in order to live. The real world consumer’s capacity to consume is the ultimate gauge around which everything gravitates in the end. No fiddling with spreadsheets will change that. So if there are plenty of new petrochemical plants but nobody needs their products, some of those Asian and Middle Eastern producers will have to shut in and stop producing which in turn pulls the demand for LPG down. Plus all the leftover Naphtha will also look for a place to go and
FEATURE
there is ever more product from all places producing flammables. All OPEC countries are wincing in pain from the lower oil prices and their national economies are often at the breaking point forcing them to push ever more product into the market which in turn further suppresses prices. It’s a vicious cycle and breaking free will produce calamities. Back to the US. There is more and more LPG and Latin America as well as Europe (which currently is the US primary export market) are full to the brim as well. The former powerhouse Brazil is in even worse shape than China and it’s hard to see how all this new product could ever be absorbed. If the domestic market cannot absorb LPG anymore and Latin America and Europe fail to absorb further volumes and weak or no growth in China means that Petrochemicals won’t be as priced anymore as they were just 2 years ago, then there is a real problem. Because production will not end and overcapacity will become so extreme that producers will face the stark choice to give LPG away for free or even pay penalties to get rid of it.
Investments in shale fields have to bear fruit one way or another which means that they have to keep producing oil and they also have to keep innovating in order to be able to live with ever lower prices and some products including LPG will become worthless - or essentially worthless. The only solution will be to hunt for the few physical importers of LPG that don’t use it for fickle petchems but that use it for far less sophisticated and way more stable ends - home heating
and cooking. This is essentially the case in some Latin American countries, in sub-Saharan Africa and in some places in Asia. But those markets are not endless, they are fragmented and beset by never ending bottlenecks and they sure will be at saturation point pretty soon. Time to get the nose to the grindstone and make the business developers gear up. It’s a hunt for buyers again - or soon will be. There is a saying in Germany. The last one is going. (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. 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.
SEPT 2015 | LPG BUSINESS REVIEW | 31
ADVERTORIAL
GAUGING EXCELLENCE Rochester Gauges
International S.A is a manufacturer of float level gauges and remote reading accessories for liquid level measurement. Its products are built with quality, accuracy and reliability, benefitting from its vast experience. It provides tailored solutions, innovative designs and technologies that further enhance applications. The history of Rochester Gauges is an inseparable part of the Liquified Petroleum Gas (LPG) industry, dating back to the beginning of the LPG industry in 1937. The business was founded by Milt LaDue,
recognising the increase in demand for LPG equipment. In 1958, he acquired the float gauge line of Rochester Manufacturing Company, a manufacturer of liquid level gauges for the LPG industry amongst many other products, forming Rochester Gauges Inc of Texas. In 1967 Emeric Kroch and Jack LaDue, president of Rochester Gauges Inc, founded the company Rochester Gauges International S.A. and the following year began manufacturing float level gauges in Brussels-Belgium to face growing demand in the European market. Through servicing and building up a strong and confident distribution
32 | LPG BUSINESS REVIEW | SEPT 2015
network for its product, Rochester started a new production line in 1984 providing float level gauges for the agriculture, earth-moving, marine, leisure industry and industrial sector. Introducing a new range in 1986, Rochester began manufacture of electronic remote systems for mechanical float gauges in order to indicate the liquid volume at a remote location and to control the filling and the unloading of the tank by means of level set points. As a result of constant expansion, three years later the company moved to a new factory located in Wavre, 20km south of Brussels, where it
ADVERTORIAL
introduced the production of remote systems for propane domestic tank. A pioneer in the supply of equipment for LPG in Europe, Emeric Kroch had established a number of businesses, including Kroch Equipment in 1931. In 1999, Kroch Equipment became part of the Rochester Gauges International, and today distributes Rochester products but also pumps, compressors, valves, regulators, couplings and any product related to the LPG industry, being the key supplier in LPG equipments and solutions in terms of supply and engineering. With ISO 9001 certification, Rochester Gauges International constantly develops products to the highest quality standards, which has been proven over the years, selling gauges and associated solutions through a strong and confident distribution network all over the world. It has a client base that includes tank manufacturers, gas companies, telemetry networking management suppliers and retailers. Through its wide range of products with a robust and stable design, and a strong engineering team with a pragmatic approach, Rochester can supply tank gauging solutions from cylinders to large storage tanks ranging from diameters of eight inches (200mm) up to 17 feet (5200mm), including domestic tanks, LPG
delivery trucks and trailers. With electronic sensors and receivers, which can be easily retro-fitted on existing gauges, Rochester also provides products for telemetry or automated applications, providing the opportunity to keep a local direct reading with an extra resistive current or voltage output. Its range of associated receivers offer remote reading with digital display, alarms, adjustable set points, relays and communication ports for networking management, meeting the actual and future market requirements for domestic tanks, service stations, storage tanks, delivery trucks, containers and automotive industry. In 2000, Rochester became CE approved according to the pressure equipment directive (PED), and later certified by other European regulations such as TPED, R67 and ATEX. Several years ago, Rochester launched the R3G gauge with proven and certified benefits, such as high mechanical resistance to strong vibrations and handling. The spring steel construction float arm and aluminum flange and body design, ensures a constant calibration and accuracy and is available with any required options such as a metal/ window lid, inert liquid filled dial or brass head according to customer’s requirements.
The so called “Magnetel™” gauge, had been designed by 1955 and since then only cosmetics modifications have been applied to this robust construction assembly. An alternate design was also introduced for mobile application, so called “rough rider” in order to withstand extreme shocks and vibrations (thanks to a specific spring mechanism) induced for off-road applications or rough ISO container tank handling. Working principle of magnetic float arm type gauge simply operating by means of a float actuating a powerful magnet inside the container underneath the gauge’s head (flange). Providing magnetic field transmission through the head, the drive magnet actuates the dial’s needle magnet to indicate the tank liquid content. The dial may be removed and replaced quickly at any time without loss of liquid, pressure, vacuum or costly downtime. Such an assembly, allows customers or end users to easily retrofit any transmitter in order to provide telemetry options. Geared type gauges convert circular float travel assembled with a pinion to the gears of the support shaft, incorporating internal rod onto which is crimped the drive magnet of the level gauge. This allows any mounting position onto tank: top, bottom, side, end or angle.
SEPT 2015 | LPG BUSINESS REVIEW | 33
ADVERTORIAL According to the application and level gauge implementation, Rochester alternatively provides lever type gauges for horizontal mounting or spiral type gauges for top mounting (for narrow tanks where the space does not allow the use of a float arm). Also depending on the application, our gauges are made of different construction materials in order to fulfill customer requirements in terms of material compatibility with the liquid to be gauged but also according to external potentially harsh environment. Amongst others, these include Aluminium, Stainless Steel (various grades up to 316), Brass, Zinc or Plastic. Keeping the product adequacy while ensuring the controlled costs in regards to the application. Another interesting aspect of the Rochester float gauges is the interchangeability of dials without having the mechanical assembly dismounted from the tank (ensuring leak tightness at any time). These dials are available with various sizes (diameters) even including a side-reading dial for easier readings from the users. Optionally, the dials can be equipped, while keeping the direct reading, with an electrical output (Current, Voltage or Switches) enabling an easy upgrade for telemetry management purposes. Lately Rochester gauges launched a new (patented) design of level gauge for domestic tanks and portable cylinders, incorporating a spring steel wire float (wounded) avoiding any damage with consequences of erroneous readings. This became quickly a new industry standard widely spread around the globe. Thanks to this specific feature, tank manufacturers do not have to worry any longer of any misuses or damages occurred while the (empty) tanks are being transported to end customers. Besides this, Rochester keeps on investigating improvements
considering the whole range of products, as per Rochester’s president favorite saying “never imitating, always innovating”! The 500 strong workforce of Rochester Gauges group and know how equally supports its position at the forefront of the sector. The company has established a clear commitment to its future through its focus on the vision, mission, engagement and quality. As an enthusiastic, dynamic and positive company, its products are recognised for the high quality, manufactured using the most advanced engineering techniques. Beyond manufacturing, it maintains a quality control through detailed selection of raw materials. Working hand in hand with customers the business understands their needs and is able to address them in the most effective and beneficial way. The groups’ popular and high quality products, notably its Magnetel rough rider gauge, Junior or Senior four inch gauge and Hall Effect Twiniste, ensures it remains the market leader in the LPG market. Having set the
34 | LPG BUSINESS REVIEW | SEPT 2015
industry standards through the years, Rochester products have been widely copied, but hopefully never equaled! After having exhibiting at the Africa LPG summit held in Kenya by July 2015, the business will be attending WLPG forum in Singapore by the end of September 2015, the largest LPG exhibition and conference worldwide. Then Rochester will be back in Africa for the LPG summit held in Tanzania by July 2016. Recognising the benefit to showcase the latest products, services and innovations, Rochester is looking to establish new clients to support the continued growth of the business. Rochester Gauges International S.A www.rochester-gauges.be Services: Manufacturer of float level gauges and remote reading accessories (LPG Business Review)
SEPT 2015 | LPG BUSINESS REVIEW | 35
FGE CONFIDENTIAL Shipping Rates: Record High TCEs in July “Spot earnings for shipowners are double that of term charter revenues.” VLGC Timecharter Equivalents ($mil/month)
With the Baltic in mid-July close
to reaching $140/ton, the TCE (time charter equivalent) hit a record high of $4 million per month. Spot rates on this basis are currently double those under oneyear charter rates. By comparison, recently Vitol and Shell took the Morston and Cobra on one year T/C rates around $2 million per month for a year. That term rate level is the highest reported rate for a nonPanamax VLGC so far this year. Recent VLGC Trends Recent market trends do seem to point to the tight short-term VLGC market continuing for shipping and the expectation for a sharp drop in rates will be somewhat delayed in the medium term. Recently, there has been some rate correction since the start of last week, with the Baltic dropping below
$120/ton based on latest indications. Some traders with positions out of the US Gulf have chosen to cancel cargoes and relet their vessels, with the price spread between CFR Japan propane and FOB US Gulf declining to below even the estimated term freight costs since last week.
300
US Gulf to Asia: Propane Price Spread vs Term Freight
250 $/ton
4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0
Indian LPG Imports An important contributor to the present tight VLGC market has been the LPG trade into India. Import demand is likely to remain strong in the third quarter as the festive season approaches. Lump-sum rates for the Ras Laffan to India route have been fixed as high as $6 million; more than $2 million higher than rates earlier this year. Charter parties can cover up to 40 days including waiting time. Rated throughput at all LPG import terminals in India has been put at 5.9 million tons per year. This compares with actual LPG imports into India in 2014 of 7.9 million tons and probable LPG imports of 8.4 million tons in 2015. This difference has contributed to the lengthening delays for LPG carriers at Indian discharge ports. Don’t expect conditions to change much for a while. The planned IOC import terminal at Cochin for LPG has finally seen some progress, with the construction contract awarded to a local company RKEC Projects. The terminal should be able to handle 600,000 tons of LPG per year at capacity. But it will not become operational until late 2017 at the earliest.
200 150 100
CFR Japan minus FOB USG
36 | LPG BUSINESS REVIEW | SEPT 2015
TC rates plus bunkers
FGE CONFIDENTIAL
Market Feature — The US Propane Build Still Moderate The recent weekly inventory
build has generally been a bit below industry expectations—except for this past week with an inventory build of 2.8 million barrels versus an expectation of 1.1 million barrels. Even so, as we approach the Labor Day marker for the end of summer, the propane inventory
total may not be as high as many had feared back in June. The total on August 7 was 92.2 million barrels. That is still 32% higher than the inventory level at the same time last year. The main increment, as the chart below shows, has been in Gulf Coast inventories. The fear had been that these
USUS PROPANE INVENTORIES P ropane Inventories 60 50
40 20 10 0 tElsewhere
MidwestE 8/2014
8/2015
number of VLGCs
An Update on VLGC Newbuilding Deliveries 11
15
13
13 9
8
FY 2014
6
5
Q1
Q2
9
8
3 Q3
Q4
Q1
2015
Q2
Q3 2016
Delivered
Orders
Q4
Propane production has maintained its upward trend this year, particularly the Marcellus propane out of the East Coast. Propane exports out of the Enterprise and Targa terminals have been close to maximum levels over the summer (although there has been some faltering recently because of poor economics). Propane domestic cracking has been steady. Propane Price Outlook Propane prices should remain moderate over the crop drying and winter demand season. Earlier this summer the forward market suggested that December Belvieu prices might touch 50 cents/ gall ($260/ton). Now on weaker oil prices today the view is around 42 cents/gall. ($220/ton).
30
Gulf Coast
inventories could go well above the 100 million barrel level and result in all types of containment problems. This has not happened, probably for a couple of reasons: • more refinery propane is being burnt at the refinery as fuel; • and more propane, even at this stage, has moved to (not reported) secondary and tertiary storage.
FY 2017
Seven VLGCs have been delivered in June and July. These are:
• two to Avance Gas, the Passat and Sirocco • four to Dorian LPG, the Cougar, Cobra and Concorde and Continental • and one to Petredec, the Saltram. • The chart shows an update on the VLGC newbuilding schedule. There are another 11 vessels scheduled for delivery in Q3. It is very likely that some of these will get pushed to Q4. We think that significant pressure on freight rates from newbuildings will likely only come in the last two months of the year, before leading to a sharp drop in 2016.
SEPT 2015 | LPG BUSINESS REVIEW | 37
FGE CONFIDENTIAL
Ghana Western Corridor Gas Infrastructure Development Project
As
part of the Ghana Western Corridor Gas Infrastructure Development project, BOST (Bulk Oil Co. Ltd) has built a new 150 million cf/day at Atuabo— Ghana’s first gas processing plant. Although the plant was successfully commissioned in April 2015 - a year after its original plan - it is at present running below capacity at around a 60-70% utilization rate.
Feed gas comes from the FPSO vessel located on the Jubilee Field. The plant is designed to produce 500 tons of LPG per day at capacity, or 180,000 tons per year. Since start-up, it has been supplying 300 tons per day to the local market. China funded the $800 million BOST plant and Sinopec has implemented the project.
How Do You Forecast Belvieu Prices? “Gas is probably a better pricing basis for propane than crude oil.” BASF
may be struggling to forecast Belvieu prices. So are the rest of us. The forward market is of little help. It is only really of some value six months out. But that does not help us with longterm decision-making. Propane and Crude Prices The lazy approach has been to relate propane to crude oil prices, in this case WTI. It is regularly reported on this basis. But the actual percentage has little meaning. Propane used to run at 7080% of WTI crude on a volume basis. It dropped to 40-50% in 2013-2014 and as low as 27% in mid-2015. To have projected forward on their earlier propaneto-crude price bases would have given completely erroneous propane price forecasts. That said of course, the
collapse in crude prices in late 2014 did obviously contribute to the propane price fall at that time. Propane and Gas Prices Gas prices have, in our view, more relevance as a price-setter on a mark-up basis. What type of mark-up may depend on whether we are in a sellers’ market for propane or a buyers’ market. A Sellers’ Market. Here then we might look at the so-called frac spread. This shows the margin the producer and midstream player makes in extracting NGLs from gas. Propane is not the only NGL extracted of course. But propane is one of the most important of
38 | LPG BUSINESS REVIEW | SEPT 2015
Sinopec has recently began the FEED for the next phase of this development project This consists of a new terminal in Domunli and connecting pipelines between Atuabo and Domunli. The terminal will be used to ship produced LPG and condensate to Tema. It is currently being transported there by truck.
the fractionated products. A Buyers’ Market. We might argue that we are in a buyers’ market today. Thus the buyers’ economics count more. The key swing buyer here is the petrochemical buyer as he considers propane against other feedstocks in his steam cracker, here primarily ethane. Ethane prices are derived directly from gas prices, either flat as gas Btu parity (as currently) or as a mark-up over gas prices, depending on the US ethane supply/demand balance. Propane competes against ethane as petrochemical cracker feed. Its competitive price is set by ethane prices and the relative prices of petrochemical products (ethylene and its co-products such as propylene, butadiene and py gasoline). Petrochemical buyers regularly make their own feedstock comparisons on this basis. As do outside observers like ourselves.
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
STATISTICS LPG Consumption
% Household Use
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
Country
% Industrial Use
% Transport Use
Produced LPG
Imports
Exports
SEPT 2015 | LPG BUSINESS REVIEW | 39
STATISTICS LPG Consumption
% Household Use
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
Country
% Industrial Use
% Transport Use
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 | SEPT 2015
Produced LPG
Imports
Exports
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