Cass Business School Presentation – 29 January 2018 - London
Cass Business School Presentation – London
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Multiclient Products
Training/Workshops
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Commercial Advice
Market Insights
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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.
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Disclaimer
Cass Business School Presentation – London Jan-18 3
Cass Business School Presentation – London
LPG Market Fundamentals
A Closer Look into the Market
Gas Liquid Shipping Intro
The Role of the Modern Commodity Analyst
Jan-18 4
Cass Business School Presentation – London
Cass Business School Presentation – London
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
Cass Business School Presentation – London
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
Cass Business School Presentation – London
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
Cass Business School Presentation – London
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
Cass Business School Presentation – London
• 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
Cass Business School Presentation – London
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
Cass Business School Presentation – London
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
Cass Business School Presentation – London
Cass Business School Presentation – London
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
Cass Business School Presentation – London
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
Cass Business School Presentation – London
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
Cass Business School Presentation – London
≈ 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
Cass Business School Presentation – London
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
Cass Business School Presentation – London
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
Cass Business School Presentation – London
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
Cass Business School Presentation – London
Cass Business School Presentation – London
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
Cass Business School Presentation – London
• 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
Cass Business School Presentation – London
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
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
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