India LPG imports to grow
India’s LPG consumption is forecast to increase by nearly 6pc to 23mn t by the end of 2018 as the government invests in infrastructure, according to Indian consultancy Arihant Global.
Energy consumption in India is expected to double by 2030 and shift towards increased LPG and natural gas usage, Arihant Global chief executive Hemal Sanghani said today at the Argus Americas LPG Summit in Houston.
Only 18pc of India’s population now uses LPG, but a government initiative would convert 50mn households to LPG by 2019 by adding cylinders and cooking equipment to rural, low-income households. In rural areas, LPG only accounts for 30pc of cooking fuel while in urban areas LPG accounts for 82pc of residential energy consumption.
The upside for rural LPG demand in India may be limited, according to Nick Black, Principal LPG at Argus Consulting. Rural users’ demand growth appears to account for only an additional two cylinders per household per year, according to Argus Consulting.
India’s overall LPG imports will rise from 10.9mn t at the end of 2017 to 12mn t this year, according to Arihant.
The Middle East, including Saudi Arabia and Qatar, supplies 90pc of India’s LPG imports. India’s imports surpassed China’s in December, at 2mn t, Sanghani said. Most imported cargoes total no more than 7,000-23,000t as the terminals lack storage capacity for larger volumes seen elsewhere in Asia.
India is investing $4.5bn to expand terminals, storage, bottling plants, and build new pipelines. The projects include a 2mn t/yr import terminal on the west coast and a 60,000t storage cavern planned by Total and Hindustan Petroleum in southern India.
US LPG is increasingly competitive with the Middle East, Sanghani said. The US supplied 50,000-100,000t of LPG to India during the first quarter of 2017, Arihant estimates.
Gains in India’s consumption comes as US shale production continues to leave the global LPG market a long during the next few years, according to Argus Consulting. Argus consultants are forecasting global LPG production will continue to grow until 2020, when it begins to level off and flatten in 2025.
“No one is predicting that demand will be flat,” Black said. Increased demand from Asia will be led by China and India, he said. The rest of the region, including Pakistan and Bangladesh, will see demand growth increase by 50pc from 2010 to 2027, according to Argus Consulting.
Given a flatter market, the US-Asia arbitrage for LPG is likely to remain narrow for the foreseeable future, Black said.
“We don’t foresee this arbitrage widening out in the conceivable future, and certainly not to the $400-$500/t levels seen,” in 2013, Black said.