Saving LPG

Mandatory LPG export is a highly significant issue in exporting valuable gas resources, which has been included in the national budget for the current Iranian calendar year. The government is required to prevent LPG from being wasted away and instead facilitate LPG exports. To that effect, the Petroleum Ministry is required to use private investment to finance projects which would prevent valuable gas products from being wasted away. The projects include flare gas recapturing and processing to produce at least 300,000 tonnes a year of ethane and heavier products in South Pars and Masjed Soleiman, completing propane and butane (LPG) recovery, refining, cooling and transmission at South Pars gas refineries, supplying necessary equipment, enhancing ethane recovery at gas refineries in the country to guarantee feedstock supply to petrochemical plants and recouping investment from the profits to be gained from the implementation of projects. After 2,000 tonnes of LPG was recently burnt at the Bandar Abbas Oil Refinery and Bandar Abbas Gas Condensate Refinery, an ad hoc committee was set up at National Iranian Oil Refining and Distribution Company (NIORDC) to prevent LPG wasting. The committee helped facilitate offshore LPG exports. After the first cargo of LPG was exported offshore from the two Bandar Abbas refineries, 2,000 tonnes a day of LPG was saved while 6,000 tonnes a day was exported.

Simultaneous Loading/Unloading

Ali Akbar Nejad-Ali, CEO of NIOPDC, said the company was the exclusive distributor of petroleum products in the country. He said that a working group had been established within NIOPDC to make planning for an optimal transport of oil products in the country while lowering transport costs.He said that nine platforms could handle 6,000 tonnes of cargoes a day, noting that loading and unloading could be done simultaneously. This project would earn Iran up to $360 million a year.

Iran is determined to focus on offshore LPG exports. Maximizing LPG exports is an objective set by NIOC under the 13th administration. Recently, LPG storage and loading installations and a full export chain became operational in Assaluyeh, which would generate $1 billion in annual revenue for Iran. A private firm is in charge of the project. Mohsen Khojasteh-Mehr, CEO of NIOC, said the private firm has built a terminal or $100 million next to other terminals. Experts believe that the LPG terminal would put an end to monopoly by some countries in the region in this sector.

The LPG storage and loading facilities and the full export chain, including land transport and gas-carrying ships, may become operational by foreign investment. In addition to preventing LPG waste, they can help earn Iran nearly $1 billion in revenue.

LPG Exports Set Record

A review of Iran’s LPG exports indicates that Iran has set a two-year record of LPG exports. Iran’s LPG shipments are around 440,000-450,000 mt in October compared with 556,000 mt exported in September 2021, largely to Asia, and are expected to rebound in November. Exports up to Oct. 13 were around 220,000 mt, the sources added.

“The export volume in October will be lower in comparison to September. The export volume is fluctuating between 450,000 mt/month and 530,000 mt/month,” a trade source told S&P Global Platts. “November figure will be estimated to be the same as September in case we don’t face shutdowns.”

That would help meet China’s demand as more power plants would be back to service after overhaul. Wanhua Chemical has announced that its power plant had resumed work after a 40-day shutdown on October 13 with a capacity of 750,000 tonnes a year.

According to the report, LPG prices rose in Asia as heating demand increased ahead of winter in the Northern Hemisphere and worries about global gas supply.

The price of the product hit $910 /mt on Oct. 6, the highest since July 2, 2014, when it hit $918 /mt, Platts data showed.

LNG prices fell to $870.50/mt on Oct. 15, as the buying and selling market temporarily subsided and competition among sellers intensified.

LPG Exports Forecast

Iran's LPG exports volume is projected at around 6 mt in 2022, with China poised to remain the main buyer, and in case the US sanctions imposed on Iran’s energy sector during Trump administration volume could be higher, sources familiar with the matter said.

"The export volume is between 450,000-530,000 mt/month, depending on vessel availability," a source told S&P Global Platts.

"The production is increasing, but the problem is the limited number of vessels that are calling at Iranian ports. China is the main and biggest importer of Iranian LPG and without any change in 2022."

Other trade sources estimated Iran's 2022 LPG exports at around 5.6 mt, from 5.5 mt last year. But analysts have expected Iran to increase its LPG exports volume by 1.9 mt this year. Iran also intends to increase its daily gas production by 130 MCM/d.

Courtesy of Iran Petroleum