Liquefied Petroleum Gas - LPG

 

 

 Liquefied petroleum gas (also called LPG, LP Gas, or autogas) is a mixture of hydrocarbon gases used as a fuel in heating appliances and vehicles, and increasingly replacing chlorofluorocarbons as an aerosol propellant and a refrigerant to reduce damage to the ozone layer.

LPG mixes may be primarily propane, primarily butane, or the more common mixes including both propane and butane, depending on the season. In winter more propane, in summer more butane. Propylene and butylenes are usually also present in small concentration. A powerful odorant, ethanethiol, is added so that leaks can be detected easily. The international standard is EN 589.

LPG is synthesised by refining petroleum or ‘wet’ natural gas, and is usually derived from fossil fuel sources, being manufactured during the refining of crude oil, or extracted from oil or gas streams as they emerge from the ground. LPG is considered a “clean fuel” as it burns cleanly with no soot and very few sulfur emissions, posing no ground or water pollution hazards. LPG has a typical specific calorific value of 46.1 MJ/kg compared to 42.5 MJ/kg for diesel and 43.5 MJ/kg for premium grade petrol (gasoline). However, its energy density per unit volume is lower than either petrol or diesel.

At normal temperatures and pressures, LPG will evaporate. Because of this, LPG is supplied in pressurised steel bottles. In order to allow for thermal expansion of the contained liquid, these bottles are not filled completely; typically, they are filled to between 80% and 85% of their capacity. The ratio between the volumes of the vaporised gas and the liquefied gas varies depending on composition, pressure and temperature, but is typically around 250:1. The pressure at which LPG becomes liquid, called its vapour pressure, likewise varies depending on composition and temperature.

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Different LPG carrier ships based on type

LPG vessels are divided into the three main types:

• Fully pressurized ships

• Semi-refrigerated ships

• Fully refrigerated LPG

Additionally, you have Ethylene ships which are semi refrigerated ships able to transport cargoes at -104 °C. 

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LPG Carriers

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LPG carriers categorized by size

The most commonly used sub-segments for the LPG carriers:

Handy Gas Carriers

Handy Gas Carriers are LPG vessels of about 15 –25,000 cbm. A diverse segment which includes semi-refrigerated, fully-refrigerated and some larger, pressurized ships that carry a wide range of cargoes such as ethylene, petrochemicals, LPG and ammonia on short to medium-haul routes.

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Coasters

The LPG vessels below 15 000 cbm are often referred to as coasters.‍

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Mid-Sizes

These are LPG vessels of about 25,000–50,000 cbm, typically fully refrigerated, carrying ammonia or LPG, on intra-regional routes (e.g. within the Americas or Asia) and medium-haul cross-trades (e.g. in the North Sea and Europe).

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Large Gas Carriers (LGC)

LPG vessels of about 50,000–70,000 cbm, mainly carrying LPG and ammonia between ports limitING the VLGC ships to enter. ‍

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Very Large Gas Carriers (VLGC)

‍LPG vessels in the VLGC segment are about 70,000 cbm or above. Many of these vessels are fully-refrigerated and mainly employed on long-haul trade routes, e.g. from Middle East Gulf (MEG) and the United States to Asia.

In Maritime Optima we have used the cubic capacities of the vessels tanks, to divide the vessels into sub segments.

 

The Saudi Aramco Contract Price (CP) is the international benchmark for LPG prices and is based on four elements: Market sentiment, Spot market assessments, The values of naphtha and crude oil, and The results of three monthly spot sale tenders. 

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The CP is set by an in-house committee of Saudi Aramco's sales and marketing experts and is published on the first business day of each month. It remains fixed for the rest of the month. 

The CP is expressed in US dollars per metric tonne. It's closely watched by the market and sets a base level for LPG pricing for most markets east of Suez.

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In China, the primary benchmark for LPG pricing is the "Argus CFR Ningbo Index (ANI)," which represents the cost of delivered LPG to the port of Ningbo, and is used by Chinese importers, traders, and international producers to price LPG sales within the country; essentially, the price formula for LPG in China is based on this index, with potential adjustments depending on factors like delivery location and individual negotiations between buyer and seller. 

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The ANI is based on cargoes of 46,000 tons of propane and/or butane that are refrigerated. The assessment is for cargoes that are delivered to destination ports 25–40 days after the assessment date. 

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Key points about the LPG price formula in China:

• Base price:

  The Argus CFR Ningbo Index acts as the base price for LPG transactions in China. 

• Delivery location adjustments:

  Depending on the delivery location within China, additional charges might be added to the base price. 

• Negotiated terms:

  Individual buyers and sellers may negotiate further terms on top of the base price based on market conditions and their specific agreements. 

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Factors influencing the Argus CFR Ningbo Index:

• Global LPG market trends: The global supply and demand dynamics of LPG significantly impact the index. 

• Crude oil prices: As LPG is derived from crude oil, fluctuations in oil prices directly influence its price. 

• Freight costs: Shipping costs to China also play a role in determining the final price.  

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LPG units

 1 cubic metre = 1.8315 kg of LPG

LGC: 50,000 -70,000 cbm 

VLGC: 70,000 cbm and above 

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