Royal Dutch Shell is set to embark on a contentious Arctic drilling campaign, spending nearly $3 billion (U.S.) over two years in an effort to strike oil in an area seen as the last undiscovered frontier for the energy industry. In the face of fierce opposition from environmentalists, Shell plans to drill two new wells at sites in the Chukchi Sea, off the northwest coast of Alaska. Shell has already incurred significant costs with its stop-start Alaskan Arctic campaign; its total spending is forecast to rise to $8.4 billion by the end of 2016. By then, Shell should have an idea of whether further exploration and even development are justified.

In Northwest Europe, the large propane and butane markets have been sluggish with trade slackening. Propane prices for large, fully refrigerated cargoes are at $345 per tonne cif Amsterdam/Rotterdam/Antwerp (ARA), an increase of $18 per tonne since the beginning of June. Butane prices for large, fully refrigerated cargoes now stand at $358 per tonne cif ARA, down by $10 per tonne since the start last month.

There has been very little activity in the coaster markets, except in the butane market where buying interest will be on the lookout for refinery material. However, availability is very thin on the ground. The latest indication of propane swap deals are August $342-$346 per tonne and September $346-$350 per tonne, cif Northwest Europe.

North Sea prices for July are at $331 per tonne fob North Sea terminals for propane and at $399 per tonne for butane. Both prices have hardened since the start of July with propane up $19 per tonne and butane $43 per tonne higher.
In the Mediterranean, the markets have become very quiet with buyers and sellers appearing to be in a “stand-off” position. Prices for large, fully refrigerated cargoes of propane are $355 per tonne cif Lavera, South of France, and butane $488 per tonne. Both products have increased in price, with propane adding $18 per tonne and butane $141 per tonne.

The Algerian national oil company, Sonatrach, has set new contract prices for July at $315 per tonne fob Bethouia and Skikda for propane and $350 per tonne fob Bethouia for butane. Since June, propane has increased by $5 per tonne and butane has weakened by $10 per tonne.

Saudi Aramco has posted new contract prices for July at $395 per tonne fob Middle Eastern (M.E.) terminals for propane and at $425 per tonne fob M.E. terminals for butane. Both LPGs have softened, with propane down $10 per tonne and butane by $15 per tonne. Spot discounts against contract prices currently stand at minus $7 per tonne to minus $5 per tonne for both grades. In the Far East, there has been a lack of trading in the past few weeks due to a heavy oversupply situation that is unlikely to change in the short term.