Transcript Middle East LPG Production is Expected to Significantly Expand
Slide 1
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 2
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 3
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 4
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 5
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 6
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 7
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 8
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 9
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 10
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 11
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 12
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 13
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 14
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 15
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 16
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 17
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 18
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 2
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 3
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 4
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 5
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 6
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 7
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 8
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 9
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 10
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 11
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 12
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 13
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 14
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 15
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 16
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 17
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17
Slide 18
Global LP Gas Supply & Demand
Prepared For:
22nd World LP Gas Forum
October 8, 2009
Rio de Janeiro, Brazil
Prepared by:
Ken Otto
Purvin & Gertz, Inc.
Key LPG/Energy Market Headlines
Many dramatic changes have occurred in the LPG industry
and other energy markets since the 3QTR 2008.
First, the global economy was slowed by the rapid rise in
energy costs in 2008—then, many countries were pushed into
a severe recession by the world financial crisis.
The rapid run-up in energy prices and the economic recession
has caused global demand for petroleum products
to decline fairly sharply.
Crude oil prices have staged a recovery during 2009, but considerable
uncertainty remains in the petroleum industry.
Many regional LPG markets have been hurt by the steep price increases that
occurred in 2008 and the impact of the economic downturn.
These factors (higher prices & the economic recession) have slowed the
development of many LPG markets with strong long-term growth potential.
Use of LPG as petrochemical feedstock has attracted more attention—but
global petrochemical markets remain fairly weak.
2
Crude Oil Prices Reached Record High Levels in Mid 2008,
Dropped Hard in Late 2008 & Recovered Somewhat
Spot Brent Crude Oil Pricing, US$ per Barrel
150
133.2
125
97.3
100
65.2
75
72.6
70.0
54.5
44.6
50
38.3
28.5
24.4 25.0
28.8
25
0
2000 2001 2002 2003 2004 2005 2006 2007 Jul-08 2008 1Q Recent
2009
3
Natural Gas Prices Are Very Low in the U.S. Due to an
Oversupply of Natural Gas & Weak Demand
Spot Henry Hub Price (USA), US$ per Million BTU
14
12.70
12
10
8
6
4
8.85
8.80
5.62 5.85
6.76 6.94
4.56
4.23 4.06
3.34
2.70
2
0
2000 2001 2002 2003 2004 2005 2006 2007 Jun-08 2008 1Q Recent
2009
4
Current LPG/Energy Market Environment
Global economies are still weak in late 2009 — but some
positive signs are emerging.
The economy appears to have already bottomed out
Unemployment is still rising, but not as fast as early 2009
Stock markets have started a long recovery
Consumer confidence remains fairly low, but
appears to be improving
Global/regional economies are expected to begin to
recover by early 2010—the question is will the recovery be fast or slow.
Crude oil markets remain under some pressure—OPEC reduced production
rates and this has helped prices to recover somewhat.
The cutback in OPEC crude production has reduced LPG production in the
Mideast.
Global petrochemical demand is soft and is not expected to recover very
quickly—This will reduce feedstock demand in the short term and could lead
to weak market conditions for both LPG and naphtha in the future.
5
Global LPG Supply is Still Expected to Rise Significantly
Between 2009 and 2012
LPG Supply, Million Tonnes
300
North America
Asia/Pacific
Europe/CIS
Middle East
Latin America
Africa
LPG production is rising in
most regions of the world.
Global prod. (2009) is slightly
over 240 MM tonnes (7.8
MMBPD).
250
However, only modest growth is
occurring in 2009—due to
petroleum production cutbacks
& project delays.
200
Supply growth is expected to be
very strong in the Middle East
over the next several years—
dependent on global economic
recovery & the success of key
projects.
150
100
The Middle East will surpass
North America to become the
largest LPG producing region in
the world.
50
0
2000
2002
2005
2007
2008
2009
2010
2012
6
LPG Supply is Rising Fast in the East of Suez Region
LPG Supply, Million Tonnes per Year
180
Both LPG supply and demand
are growing relatively fast in
the East of Suez region.
East of Suez
West of Suez
160
140
Significant expansion of Middle
East crude oil and natural gas
production is the key driver in
this supply trend.
120
100
Significant expansion of Asian
refining industry is also an
important factor.
80
60
Over time, LPG production in
the East of Suez region will
approach parity with
production in the West of Suez.
40
20
0
2000
2002
2005
2007
2008
2009
2010
2012
7
Middle East LPG Production is Expected to Significantly
Expand Over the Next Few Years
LPG Supply, Million Tonnes
70
Saudi Arabia
Iran, Qatar & UAE
Middle East LPG production
dropped slightly during the early
2000s.
Production increased fairly sharply
from 2002 to 2005.
LPG production was poised to rise
significantly over the past 1-2 years.
Delays to the regional supply buildup have occurred—Production will
not increase very much this year.
A more significant supply build is
expected in 2010 and 2011.
Significant growth is anticipated in
LPG production from Qatar, the UAE
and Iran.
Others
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
8
LPG Demand Will Continue to Rise in the Future as
Global Supplies Increase
LPG Demand, Million Tonnes
Both Asia and the Middle East have
exhibited strong growth in LPG
demand.
250
Asia is the largest LPG consuming
region in the world, and is still
expanding.
200
The Middle East is becoming a more
significant LPG demand center—
Driven by both the rapid expansion
of the petrochemical industry and
continued growth in the res/com
sector.
Overall, European and North
American LPG demand is
reasonably flat—Increasing if price
sensitive LPG supplies are
available.
LPG consumption is expanding
again in Latin America—which is the
fourth largest consumer of LPG in
the world.
300
North America
Asia
Europe/CIS
Middle East
Latin America
Other
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
9
Regional LPG Demand - 2009
Million Tonnes
100
90
80
73.5
70
61.4
60
50
40
28.6
30
20.4
20
10
33.5
11.1
11.5
2.2
0
Oceania
Africa
CIS
Middle
East
Latin
Europe
North
America
America
Note: Includes Price-Sensitive LPG Demand
10
Asia
LPG Consumption Should Continue to Rise Fairly Fast in
the Middle East and Asia
Regional LPG Demand, Million Tonnes
The strongest areas of LPG
demand growth are expected
to continue to be the Middle
East and Asia.
90
2000
2008
2012
80
70
Around two-thirds of the total
world demand growth is
occurring in these two
regions.
60
50
40
The Middle East is the fastest
growing region--Boosted by
the rapid expansion of the
petrochemical industry.
30
20
10
0
Asia
North Europe/CIS Latin
America
America
Middle
East
Other
11
Asia has a large, growing
population and economic
growth will bring about
higher energy needs in the
future.
The Res/Com and Chemical Market Sectors Continue to
Dominate Global LPG Consumption
World LPG Demand, Million Tonnes
300
Res/Com
Refinery
Chemical
Other
Industrial
Auto Fuel
LPG demand in the
residential/commercial market
has been a high growth sector
of the overall market.
However, growth in the
res/com sector has slowed
somewhat due to higher prices
& the economic recession.
Together the res/com and
chemical market sectors
account for nearly 75% of total
global LPG consumption.
Future LPG market growth is
very dependent on these two
large end-use markets.
Engine fuel markets also have
high growth potential over the
longer term.
250
200
150
100
50
0
2000
2002
2005
2007
2008
2009
2010
2012
12
Consumption of LPG as Res/Com Fuel will Continue to
Expand—Particularly in Asia
Residential & Commercial LPG Demand, Million Tonnes
70
Asia is clearly the largest user
of LPG for residential &
commercial applications.
2000
2008
2012
60
50
Asia also has the largest
growth potential in this enduse sector—This market sector
should continue to expand as
economic conditions improve.
40
30
Latin America will remain the
second largest consuming
region in this sector.
20
10
The Middle East is growing
fairly fast.
0
Asia
Latin
America
North
America
Europe
Middle
East
Other
13
Consumption of LPG as Chemical Feedstock is Rising Very
Rapidly in the Middle East
Chemical LPG Demand, Million Tonnes
LPG consumption as chemical
feedstock will increase in North
America and Europe if global
supplies expand as expected.
30
2000
2008
2012
25
However, the largest expansion
is expected to occur in the
Middle East—Demand is
expected to nearly double
between 2008 and 2012.
20
15
The Middle East chemical
industry is undergoing a major
expansion—based on ethane
and LPG feedstock.
10
5
0
North America Europe/CIS
Middle East
Asia
Other
14
The Middle East will overtake
Europe to become the second
largest chemical LPG market
by 2012 and may eventually
challenge North America for
the top position.
Global LPG Exports Will Significantly Expand Over the Next Few Years
Major World LPG Exports, Million Tonnes
80
Middle East
Canada
Africa
Latin America
North Sea
Other
Global LPG exports ramped up
between 2002 and 2007—But
have not increased since 2007.
LPG exports were expected to
rise in 2009—However, delays
have occurred in some of the
export volumes.
Global trade may contract
slightly in 2009 and start to
rise again in 2010.
The Middle East will have the
biggest impact on global LPG
trade over the next few years.
A significant rise in total world
LPG exports is expected to
occur over the next few years.
70
60
50
40
30
20
10
0
2000
2002
2005
2007
2008
2009
2010
2012
15
Conclusions
Improvements in global/regional economies are expected to occur during
the rest of 2009 & in 2010.
Global LPG supplies are expected to expand fairly modestly in 2009—
followed by fairly strong supply growth in 2010 & 2011. However,
unexpected market developments might slow part of this supply build.
If the expansion in global LPG supply buildup proceeds as expected,
supply growth should outpace the growth in base demand for LPG.
This will impact the future global supply/demand balance—pushing more
supplies toward the petrochemical feedstock sector—increasing the
amount of LPG available for the price sensitive feedstock market.
Thus, LPG should be priced below competitive feedstock relationships—
improving market conditions in several important market sectors—
including petrochemical, engine fuel and industrial markets.
This should help stimulate LPG demand growth in many markets
throughout the world.
16
THANK YOU
FOR YOUR
ATTENTION
17