PLATTS [18/01/13]
Singapore (Platts)
Saudi Aramco's exports of LPG to term customers in February are estimated at 10 cargoes, or about 440,000 mt, down from 17-18 parcels in the same month last year, due to lower crude oil production and to meet higher domestic demand, industry sources said Friday.
Overall term LPG exports from Middle Eastern producers Saudi Arabia, the UAE, Kuwait and Iran are estimated to be down by 500,000 mt year-on-year next month. However, term supplies from Qatar's Tasweeq, the world's top LPG exporter, could be 100,000 mt more than last February, the sources said.
"Aramco's February program will not be as low as seven cargoes but certainly not 17... we'd have to have major petchem outages to get to that," one industry source, adding that term exports for next month are around 10 cargoes.
"Last year there were some hiccups," at Saudi petrochemical plants, he said, which allowed Aramco to boost exports of LPG to up to 792,000 mt. LPG is used as feedstock at petrochemical facilities.
Another industry source said the restart of Saudi petrochemical plants from maintenance shutdowns recently, as well as higher domestic residential and power generation demand would also divert supplies from exports.
Petro Rabigh, jointly owned by Saudi Aramco, Japan's Sumitomo and retail investors, began restarting various plants at its 400,000 b/d refining and petrochemical complex at Rabigh last week after a 20-day maintenance following a power outage, a company official said.
Sources said Saudi Polymers Company, a unit of Saudi Arabia's National Petrochemical Company, has also restarted operations in Jubail after an extended shutdown since November 11, diverting LPG feedstocks from the export market. But the restart could not be confirmed by the company.
TIGHT MIDDLE EAST SUPPLY OFFSET BY SLOW NORTH ASIAN DEMAND
Crude production in Saudi Arabia, the world's largest oil exporter, is expected to remain low next month, affecting production of oil products including LPG, sources said.
Saudi Arabia told OPEC that it produced 9.025 million b/d in December, down 467,000 b/d from 9.492 million b/d in November. These figures match those given to Platts last week by an industry source.
Saudi crude output has been declining since touching a peak of 10.103 million b/d last June, according to data from the Joint Organization's Data Initiative, an outcome of the producer-consumer energy dialog.
But some market sources said that while grappling with lower production and rising domestic demand, Saudi Aramco has also received requests from traditional buyers for more term supplies to compensate for shortfalls from Iran due to concerns over Western sanctions and to meet demand from new customers.
They said that Aramco has to juggle the different expectations and on balance, its total term export volumes have actually risen by around 500,000 mt this year from about 5.3 million mt in 2012, largely to meet demand from new lifters.
The impact has sharply reduced monthly spot exports, "...and more loading delays [for term cargoes] in coming months could happen too," one trade source said.
Sources said as in December and January, Aramco may not offer any spot cargoes for February.
Saudi Arabia has been reducing spot exports since last September, limiting monthly shipments to one or two cargoes. Shipments in November were estimated at two cargoes, down from four cargoes for August and up to 11 spot parcels of 44,000 mt each for July.
The shortage of term and spot supplies from the Middle East in February comes as the hostage crisis at the In Amenas gas field, jointly operated by BP, Norway's Statoil and state-run Algerian energy firm Sonatrach, could disrupt around 80,000 mt of propane production, sources said.
Even though Algerian supplies mainly go to Europe, one trader said: "I guess all disruptions count to the market." Such supply concerns and loading delays of Saudi term exports next month have injected support to the LPG market, which has recently slid to a near one-month low.
On Thursday, prices of propane and butane for delivery along the Singapore-Japan route 30-45 days rose to $908/mt. Just the previous day, propane had fallen to $875, near the lowest level in around five months at $874/mt hit on December 14, 2012.
But traders said that while Middle Eastern supplies are tight next month, demand remains lackluster, helping to prevent a jump to the recent high assessed by Platts on September 12, 2012,of $1,148/mt.
Japanese buyers are comfortable with their current stockpiles -- even though end-December inventories are expected to be lower than in end-November -- and they are expected to draw upon this to meet winter demand.
The current February/March backwardation of around $20/mt in the Contract Price swaps market also continued to keep Japanese trading houses from buying, traders said. "The Japanese are waiting for March to buy," one trader said.
Petro Rabigh, jointly owned by Saudi Aramco, Japan's Sumitomo and retail investors, began restarting various plants at its 400,000 b/d refining and petrochemical complex at Rabigh last week after a 20-day maintenance following a power outage, a company official said.
Sources said Saudi Polymers Company, a unit of Saudi Arabia's National Petrochemical Company, has also restarted operations in Jubail after an extended shutdown since November 11, diverting LPG feedstocks from the export market. But the restart could not be confirmed by the company.
TIGHT MIDDLE EAST SUPPLY OFFSET BY SLOW NORTH ASIAN DEMAND
Crude production in Saudi Arabia, the world's largest oil exporter, is expected to remain low next month, affecting production of oil products including LPG, sources said.
Saudi Arabia told OPEC that it produced 9.025 million b/d in December, down 467,000 b/d from 9.492 million b/d in November. These figures match those given to Platts last week by an industry source.
Saudi crude output has been declining since touching a peak of 10.103 million b/d last June, according to data from the Joint Organization's Data Initiative, an outcome of the producer-consumer energy dialog.
But some market sources said that while grappling with lower production and rising domestic demand, Saudi Aramco has also received requests from traditional buyers for more term supplies to compensate for shortfalls from Iran due to concerns over Western sanctions and to meet demand from new customers.
They said that Aramco has to juggle the different expectations and on balance, its total term export volumes have actually risen by around 500,000 mt this year from about 5.3 million mt in 2012, largely to meet demand from new lifters.
The impact has sharply reduced monthly spot exports, "...and more loading delays [for term cargoes] in coming months could happen too," one trade source said.
Sources said as in December and January, Aramco may not offer any spot cargoes for February.
Saudi Arabia has been reducing spot exports since last September, limiting monthly shipments to one or two cargoes. Shipments in November were estimated at two cargoes, down from four cargoes for August and up to 11 spot parcels of 44,000 mt each for July.
The shortage of term and spot supplies from the Middle East in February comes as the hostage crisis at the In Amenas gas field, jointly operated by BP, Norway's Statoil and state-run Algerian energy firm Sonatrach, could disrupt around 80,000 mt of propane production, sources said.
Even though Algerian supplies mainly go to Europe, one trader said: "I guess all disruptions count to the market." Such supply concerns and loading delays of Saudi term exports next month have injected support to the LPG market, which has recently slid to a near one-month low.
On Thursday, prices of propane and butane for delivery along the Singapore-Japan route 30-45 days rose to $908/mt. Just the previous day, propane had fallen to $875, near the lowest level in around five months at $874/mt hit on December 14, 2012.
But traders said that while Middle Eastern supplies are tight next month, demand remains lackluster, helping to prevent a jump to the recent high assessed by Platts on September 12, 2012,of $1,148/mt.
Japanese buyers are comfortable with their current stockpiles -- even though end-December inventories are expected to be lower than in end-November -- and they are expected to draw upon this to meet winter demand.
The current February/March backwardation of around $20/mt in the Contract Price swaps market also continued to keep Japanese trading houses from buying, traders said. "The Japanese are waiting for March to buy," one trader said.
Ramthan Hussain, ramthan_hussain@platts.com
Edited by Jonathan Dart, jonathan_dart@platts.com
Edited by Jonathan Dart, jonathan_dart@platts.com
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