Asia Faces Costlier LPG
Low US oil prices have prompted a significant downward revision of the US natural gas liquids (NGL) production over the next few years, which may increase liquefied petroleum gas (LPG) import prices for Asia, according to S&P Global Platts Analytics.
The drop in 2020 is expected to be about 289,000 bpd, or 4.6% below initial estimates, followed by 776,000 bpd in 2021, down 12% and then reaching the maximum decline of about 1.12 million bpd in 2022, down 16%, sad Platts Analytics.
"Due to the significant drop in recent oil prices, our latest forecast shows the near term, April-June, US NGL production falling. This essentially means low purity product -- ethane, propane and butane -- production," Platts Analytics said.
Upstream companies' debt-related issues have also led most of them to significantly revise down the capital expenditure guidance.
Enterprise Products Partners said it will slash 2020 capital spending by more than $1 billion and delay projects, as it adjusts to the changing energy environment and as the midstream sector adjusts to declining business and volumes due to the coronavirus pandemic.
Unlike crude oil, storage for NGLs is currently, or in the foreseeable future, not an issue, while lower NGL production makes this even less of a problem.
source: Financial Tribune
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