Supplying Future Energy Needs

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Analysts have forecast that the world’s hunger for energy will rise by more than 40% in the next two decades, with exports from oil-producing countries likely to slow down. However, it is expected that there should be enough energy available to meet climbing demand until 2035, when a fifth of the world’s gas will come from shale production. Some 81% of the world’s energy will still come from oil, coal, and gas in 2035, but the decline of oil will mean that year will be the first year in human history that the world is not reliant on a single fuel. Because of the shift to gas and renew­able technology, the demand for oil across the European Union is expected to fall to 1967 levels. After falling to less than $50 per barrel (U.S.) in recent weeks, crude oil prices are now hovering above the $60 per barrel mark.

In Northwest Europe, the large propane and butane markets have been more active recently, although product has been tight. Large, fully refrigerated propane cargoes are now at $379 per tonne cif Amsterdam/Rotterdam/Antwerp (ARA), up by nearly $100 per tonne from a month ago, and butane prices for large refrigerated cargoes now stand at $399 per tonne cif ARA, which is an increase of $122 per tonne from the beginning of January.

The smaller pressure propane and butane sector of the markets have also been busy, especially with demands from gasoline blenders. The latest indication of propane swap deals are March $402-$406 per tonne and April $400-$404 per tonne, both cif Northwest Europe.

North Sea prices for February are at $316.50 per tonne fob North Sea terminals for propane and at $297.50 per tonne fob North Sea terminals for butane. Since the beginning of January, propane prices have weakened by $13.50 per tonne and butane has jumped $15.50 per tonne.

With the closure of several Algerian ports in the Mediter­ranean due to bad weather, propane supplies have been disrupted, leaving Italy and other destinations short of product. Prices for large, fully refrigerated cargoes of propane are $482 per tonne cif Lavera, south of France, and butane prices are $503 per tonne cif Lavera. Both prices have increased from last month by $117 per tonne and $167 per tonne for propane and butane, respectively.

Sonatrach of Algeria has posted new LPG contract prices for February at $325 per tonne fob Bethouia and Skikda for propane and at $340 per tonne fob Bethouia for butane. Both prices have softened with propane losing $15 per tonne and butane $40 per tonne.

The Saudi Arabians have fixed new contract prices for February at $450 per tonne fob Middle Eastern (M.E.) terminals for propane and $480 per tonne fob M.E. terminals for butane. Both products have strengthened with propane adding $25 per tonne and butane $10 per tonne. Spot discounts against contract prices currently stand at minus $6 per tonne to minus $4 per tonne for both grades of LPG.

In the Far East, there has been a lack of supplies, helped along by the demand caused by low winter inventories in Japan. Arbitrage cargoes from the U.S. and West Africa are expected to provide supplies for the second half March. The VLGC (very large gas carrier) market has become more active, resulting in improved freight rates.

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