cass business school presentation 29 january 2018 - london · crude blending and diluent lpg gl gas...

Cass Business School Presentation – 29 January 2018 - London

Cass Business School Presentation – London

Consulting

Multiclient Products

Training/Workshops

www.nglstrategy.com

“Connecting high quality analyticswith commercial decision making”

Commercial Advice

Market Insights

Retainer Agreements

NGLS Expertise

LPG

Ethane

Olefins and their feedstocks

Global petchem gases trade

Jan-18 2

IT SHALL BE KNOWN AS NGLSTRATEGY, LLC “NGLS”. THIS PRESENTATION IS FOR GENERAL INFORMATION PURPOSES ONLY. IT SHOULD NOT BETAKEN AS PROFESSIONAL ADVICE ON THE MERITS OF THE SUBJECT MATTER OF THIS PRESENTATION. IF NECESSARY, PROFESSIONAL ADVICESHOULD BE OBTAINED FROM A PRACTITIONER WITH EXPERTISE IN THE FIELD OF THIS SUBJECT MATTER. NGLS MAKES NO REPRESENTATIONS,OR WARRANTIES, OF ANY KIND WITH RESPECT TO THE ACCURACY, COMPLETENESS OR SUITABILITY FOR ANY PURPOSE OF THE INFORMATIONCONTAINED IN THIS PRESENTATION. NGLS EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR APARTICULAR PURPOSE REGARDING THE MATERIALS AND THIS PRESENTATION. THESE SLIDES MAKING UP THIS PRESENTATION ARE THEINTELLECTUAL PROPERTY OF NGLS AND ARE PROTECTED BY THE COPYRIGHT LAWS OF THE UNITED STATES OF AMERICA AND OTHERCOUNTRIES. USE OF THESE SLIDES ARE STRICTLY PROHIBITED WITHOUT EXPRESS PERMISSION OF NGLS.

NGLStrategy, LLC ©Copyright 2018

Disclaimer

Cass Business School Presentation – London Jan-18 3


LPG Market Fundamentals

A Closer Look into the Market

Gas Liquid Shipping Intro

The Role of the Modern Commodity Analyst

Jan-18 4


C1 MethanePower generation and industrial/residential fuel

C2 Ethane Petrochemicals

C3 PropanePetrochemicals and industrial/residential fuel

iC4 IsobutaneGasoline components and petrochemicals

nC4 ButaneGasoline components and petrochemicals

C5+Natural Gasoline

Gasoline

Condensate (API 47+)

Crude blending and diluent

LP

G

NG

L

Gas Plant

PuritiesY-Grade

Crude

Fractionation

Oct-2017 6

Jan-18 6

Associated Gas

Non Associated Gas

Gas


Residential

GasolineBlending

PetrochemicalIndustrial

Autogas

PowerGen

Downstream

Gas Plant

Upstream

Exploration

Production

Fractionation Refinery

Midstream

ShippingTruck

Railcar Pipeline

Storage

Transportation

Processing

Oct-2017 7

Jan-18 7


Total Supply

Gas Plant Refinery Imports

5%79% 16%

Other

Exports

Refinery UsesAutogas

PetchemResidential

14%

20%1%

22%

40%3%

Total Supply

Gas Plant Refinery Imports

48%10% 42%

Other

Exports

Refinery UsesAutogas

PetchemResidential

90%

0%4%

4%

1%1%

USA

LP

G D

ow

nst

ream

Bre

ak-d

ow

n 2

01

6

Ind

ia L

PG

Do

wn

stre

am B

reak

-do

wn

20

16

Oct-2017 8

Jan-18 8

Retail vs Petchem Demand 2010-2020 Cumulative Increase (%) 2010-2020


0

100

200

2010 2012 2015 2017 2020

Retail Petchem

mm

t

0%

40%

80%

2010 2012 2015 2017 2020

Retail Petchem

Cu

mu

lati

ve In

crea

se %

Jan-18 9


• The main applications within the large bulk sector include the use of LPG components as feedstocks.

• LPG and ethane, are used to produce ethylene and propylene, which are the building blocks for various petrochemicals & polymers.

Olefins (Petchem Gases)

Fibres Rubber Plastics

Ethane LPGNaphtha

Aromatics

Feedstocks

Petrochemicals

Finished Products

Oct-2017 10

Jan-18 10


EthyleneLDPELLDPEHDPE

Ethylene Oxide

PropylenePolypropylene

Propylene Oxide

Acrylonitrile

ButadienePBR

SBR

SB Latex

Olefins Major Derivatives Major final Products

Oct-2017 11

Jan-18 11

-20

20

2012 2014 2016 2017 2020

mm

t


High Growth

Some Growth

Stable to Decreasing Stable to

DecreasingStable to

Decreasing

Some Growth High Potential

Retail Growth West

0

50

2012 2014 2016 2017 2020

mm

t

Retail Growth East

General Factors

Weather

Population

GDP/Inflation

Price Elasticity

Consumption per Capita

Market Factors

Government intervention

Competition with other products

Anticipating Changes

Infrastructure

Funding Availability

Marketing/Penetration

Jan-18 12


2010

≈ 290mm t

≈ 1%

≈ 20%

≈ 9%

≈ 70%

Global Supply

Retail

Petchem

Refinery

Power Gen Spiking

2015

≈ 365mm t

≈ 1-2%

≈ 29%

≈ 8%

≈ 62%

Global Supply

Retail

Petchem

Refinery

Power Gen Spiking

2020

≈ 430mm t

≈ 1-2%

≈ 32%

≈ 8%

≈ 60%

Global Supply

Retail

Petchem

Refinery

Power Gen Spiking

Oct-2017 14

Jan-18 14

Major Tight Oil US Production Major Shale Gas US Production


0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Jan-07 Jun-08 Nov-09 Apr-11 Sep-12 Feb-14 Jul-15 Dec-16

Permian

Niobrara

Haynesville

Eagle Ford

Bakken

Appalachia

Anadarko

mb

/d

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Jan-07 Jun-08 Nov-09 Apr-11 Sep-12 Feb-14 Jul-15 Dec-16

Permian

Niobrara

Haynesville

Eagle Ford

Bakken

Appalachia

Anadarko

mm

cf/d

Jan-18 15

Source: eia


Global LPG Trade 2005 Global LPG Trade 2015

+70% % per major region based on total annual volume approximation

Total LPG Seaborne Trade 2005 ≈ 50 mm t

3%

14%

8%19%

52%

Total LPG Seaborne Trade 2015 ≈ 85 mm t

25%

10%

4%13%

41%

Oct-2017 16

Jan-18 16


≈ 11

≈ 5

≈ 9

<3

≈ 36

Oct-2017 17

38.1

mm t

mm t Regional Trade

Regional Exports

11.4

25.5

9.4

≈ 9

Jan-18 17


Petchems

Steam Cracking

PDH/nBDH/iBDH

Maleic Anhydride

Other

Export Hub

Pure TradersDirectly to End-users

Integrated Traders

Sup

ply

Trad

ing

End

Use

rs

Refineries

Mostly Blending

Alkylation/Directly

Aromatization

MTBE/ETBE

Retail/Wholesale

Heating/Cooking

Small Commercial

Agricultural

Autogas

Industrial

Industrial Use as Fuel

Power Generation

NG Enrichment (Spiking)

Other

Oct-2017 18

Jan-18 18


N. Eu

rop

e Influ

ence

s

Far East Influ

ence

s

N. A

mer

ica

Infl

uen

ces

Mid

dle

Eas

t In

flu

ence

s

Glo

bal

Infl

uen

ces

Oct-2017 19

Jan-18 19


Retail

Market

•Residential Uses

•Autogas

Small Bulk Market

•Agricultural Uses

•Small Industrial Uses

Large Bulk

Market•Refinery Uses

•Petchem Feedstock

Large Industrial

Uses

•Power Generation

•Fuel Substitution including shipping

•Other industrial Uses

Low

er

LPG

Tra

de

Mar

gin

s

Jan-18 20


LNG Methane -162 0.46

C2 Ethane -89 0.542

C3 Propane -43 0.582

C4 Butane -1 0.6

iC4 Isobutane -12 0.594

C3C4 Mix LPG -4 0.598

Ethylene -104 0.575

Propylene -47 0.613

VCM -14 0.972

Butadiene -4.5 0.653

Butylenes -6 0.625

NH3 Ammonia -33 0.683

Product Temp. (°C) Density (t/cbm) Fully Ref Semi-Ref*¹ Pressurized Ethylene*²

*² Semi-Ref with ethylene capabilityand in some occasionsLNG capability

Membrane*³

*¹ Semi-Ref without ethylenecapability

*³ GTT’s Mark III membrane tanks – i.e. Reliance LEGs

Notes

Oct-2017 22

Jan-18 22


• Smaller Segments• The freight rates in the smaller segments are assessed weekly by the major

shipbrokers in the LPG market.

• TCE rates are based on actual fixtures or in the absence of actual fixtures on market level discussions and bids.

• TCE rates are assessed for all the LPG shipping segments as published by the shipbrokers weekly. The major segments that brokers are reporting TCE rates are introduced below.

Main LPG Index

RoutePublishing

timeIndex

Frequency

Panel Members

(as of 2017)

BLPGBaltic LPG

(Baltic Exchange)

44,000mt Middle East Gulf to East

1600 (London)

Monday to Friday

Braemar ACM Shipbroking Clarksons PlatouFearnleysEA Gibson ShipbrokersHesnes Gas Steem1960 SteenslandShipbrokers Poten & Partners

Baltic LPG

Gas Shipping Segments Size ( cbm from) Size (cbm to)

VLGC 60,000 86,000

LGC 40,000 60,000

MGC 22,000 40,000

VLEC 85,000 85,000

Large Semi-Ref 12,000 37,500

Small Semi-Ref 0 12,000

Large Pressurised 6,000 13,000

Small Pressurised 0 6,000

Oct-2017 23

Jan-18 23


Fre

igh

t R

ate

s

Oct-2017 24

Jan-18 24

100

150

200

250

300

2014 2016 2018 2020 2022 2024

Nu

mb

er

of

Ve

sse

ls

Net VLGC Supply VLGC Demand

VLGC S/D Balance Baltic LPG (BLPG) VLGC Freight Rate

Cass Business School Presentation – London Oct-2017 25

0

50

100

150

Jan

-11

Ap

r-1

1

Jul-

11

Oct

-11

Jan

-12

Ap

r-1

2

Jul-

12

Oct

-12

Jan

-13

Ap

r-1

3

Jul-

13

Oct

-13

Jan

-14

Ap

r-1

4

Jul-

14

Oct

-14

Jan

-15

Ap

r-1

5

Jul-

15

Oct

-15

Jan

-16

Ap

r-1

6

Jul-

16

Oct

-16

Jan

-17

Ap

r-1

7

Jul-

17

$/t

Freight on average levels

Supply < Demand

Freight in historical heights

Demand turns negative

Freight Close to historical lows

Supply/Demand Balance looks positive beyond 2021 – all

depends on the global supply/demand factors

Jan-18 25

Cass Business School Presentation – London Jan-18 27

Doing the basics in not enough

Required to constantly be ahead of the curve

Continuous education within and beyond his specialization

Be connected with the markets and the commercial world

cass business school presentation 29 january 2018 - london · crude blending and diluent lpg gl gas...

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