Liquefied Petroleum Gas Trading
Natural gas is a popular fuel worldwide but it is limited by its pipe system; you need to be connected to a gas main to use it. Liquefied Petroleum Gas (LPG), however can be taken where the gas pipelines do not reach such as on boats on the ocean, or remote rural locations. While not necessarily the go-to energy source in the market, it is one of the most important alternatives to gasoline as millions of vehicles run on LPG in Europe.
Redstone Commodity Search has a strong network in and a deep understanding of the LPG industry and has completed mandates in Asia Pacific, India, Europe and the Americas, recent mandates our energy team have worked on include:
- LPG Trader, Switzerland
- LPG Distribution Manager, East Africa
- LPG Belgium, Switzerland
- LPG Sales, India
- LPG Trader, Singapore
- LPG Market Analyst, United Kingdom
- LPG Chartering Manger, Germany
What is LPG?
LPG is a fossil fuel which is closely linked to crude oil, both consist of hydrocarbons and are trapped beneath the earth’s surface. Approximately two thirds of the LPG we use is drilled in the same way as natural gas and is a by-product of natural gas processing while the rest is manufactured during fractional distillation of crude oil.
Its high energy content and its ability to burn readily in air makes it an excellent fuel for heating and cooking. Additionally it is used to fuel vehicles, as a refrigerant and petrochemical feedstock.
LPG is not one gas but instead refers to a group of flammable hydrocarbon gases which are liquefied through pressurisation. This group consists of propane, butane, and isobutane. LPG can be traded separated into the individual gases or in various ratios which is stored in steel vessels. Different ratios of gas are suitable for different uses: pure butane is used for smaller more portable LPG supplies such as on boats and to power barbeque stoves, while household tanks are more likely to have a majority of propane.
How is It Traded?
LPG is available for purchase to end users in cylinders or in bulk. After being extracted and refined, LPG is transported to storage terminals before being delivered to cylinder filling plants and intermediate storage areas. The cylinders are transported from the bottling plant by trucks to retailers, private and professional customers while small bulk trucks distribute LPG from the storage centres to various consumers.
The Middle East dominates this market by a significant lead. Saudi Arabia and Qatar hold first and second place for the total number of barrels exported per day. The USA comes third but produces approximately a third of the total LPG exports from Saudi Arabia and Qatar.
Countries in Asia are among the top importers of LNG with Japan importing the most followed by China, India and Korea. Other countries to import LNG include Turkey, Mexico, France, the Netherlands and Egypt.
LPG can be traded on the derivatives market with forward and swaps contracts.
Who are the Customers?
- People who live/work in places not connected to the mains gas (ie. on boats, remote rural areas, mountainous areas)
- Industries which use steam boilers, kilns or ovens
- Agricultural industry (drying crops, to produce heating in greenhouses, hot water for dairies)
- Hospitality sector (mobile catering vans, remote country pubs etc.)
- Paper and food processing industries
- Petrochemical industry