JIWON CHUNG

MANAGING DIRECTOR
OPIS ASIA
FUTURE OF ASIAN
LPG PRICING
1
INTRODUCTION TO OPIS
!
OPIS began covering petroleum news in 1977 with the launch of the award-
winning Oil Express Newsletter.
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In 1980, OPIS pioneered "rack" price discovery for thousands of wholesalers, and
now maintains the world's most comprehensive database of U.S. wholesale
petroleum prices, receiving more than 70,000 rack prices each day.
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In 1981, OPIS began providing spot price assessments for all rened products.
Today, OPIS spot gasoline, diesel and jet fuel prices are highly benchmarked in the
U.S. West Coast and other key markets. OPIS' renery feedstocks and LPG prices
are also considered a preferred benchmark by many U.S. and international traders.
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Nearly 100 billion gallons of fuel are pegged annually to OPIS rack, retail and spot
prices for U.S. gasoline, diesel, LPG, jet fuel, crude, propane, feedstocks, resid,
kerosene, ethanol and biodiesel.
!
OPIS started Asian operation from 2008 and is ready for the expansion to provide
the full range of oil product coverage for Asian market
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INTRODUCTION TO OPIS
!
Mont Belvieu
!
Conway
!
Bushton
!
Hattiesburg
!
Napoleanville
! Geismar /
Sorrento
! Sarnia
! Edmonton
! West Coast
25 years of NGL Price Benchmarking
3
WHAT IS IMPACTING LPG PRICE?
Naphtha
Regional Exports Arbitrage
Motor Fuel
Petchem Heating Fuel
Crude Oil
Cooking Fuel
4
SHIFT IN OIL PRODUCTION
Gas To Liquid : Natural Gas producing
countries will export value-added oil products
such as naphtha instead of selling natural gas
Big projects are located in Qatar, Nigeria, U.S.
British Airways announced GTL produced jet
fuel purchase in 2013
Shale Gas: U.S. could become the
worlds biggest salesman from being the
worlds biggest customer as IEA projects that
the U.S. will be the worlds largest global oil
producer, overtaking Russia and Saudi Arabia by
2020 and North America will become a net oil
exporter by around 2030
5
SHIFT IN AG LPG EXPORT
Iran Kuwait UAE Qatar Saudi Arabia
2011
30-35 million mt
Going Forward
35-40 million mt by 2015
Dominant AG Exporters
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UAE (Abu Dhabi) will take over the top exporter spot in 2014 as their export volume
will grow to over 12 million mt when its two gas projects commissioned in the year
!
Qatar will increase export to nearly 11.5 mil mt by 2015 from about 10 mil mt in 2011
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Saudi Arabias LPG production will go up, but it may supply more volume to
domestic pethem plants
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Kuwaits LPG export would increase with new project but the growth may be lagged
behind Iran
6
SHIFT IN ASIA LPG IMPORT
South East Asia China India South Korea Japan
Huge petchem demand
GDP growth and
upcoming tight
environmental
regulations
Residential
demand
Indonesia switching
from kero to LPG for
household/commercial
purposes
Growing or Easing?
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Overall LPG import will go down in Japan but residential/commercial demand will
sustain with rening capacity cuts
!
China import was expected to decline earlier but PDH projects may underpin overall
demand
!
South Korean demand has been saturated but demand from petrochemical sector
will boost its import
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India and South East Asian imports will continue grow with economy and regulation
7
SHIFT IN PETROCHEMICAL FEEDSTOCK
!
North East Asia petchem producers structurally dependent on
ME Naphtha
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Chinas top petrochemical feedstock shift to Naphtha
!
Middle East producers export price hike a"ects Asian
petchem producers
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Import-dependent Asian petrochemical producers trying to
move away from naphtha and seek alternative feedstocks
!
The producers are building new units and/or broadening plant
capacity to handle multiple feedstocks and seeking non-
traditional feedstock supplier
8
PETCHEM FEEDSTOCK OUTLOOK
10%
24%
26%
40%
North America 2010
Ethane LPG Naphtha Condensate/Others
4%
2%
22%
72%
North America post 2015
10%
21%
31%
38%
Middle East 2010
4%
3%
20%
73%
Middle East post 2015
4%
86%
7%
3%
Asia Pacific 2010
11%
75%
10%
4%
Asia Pacific post 2015
9
LPG CRACKING - SOUTH KOREA
Cracker size Before After Year
KPIC 0.47 mil mt/yr 0.21 mil mt/yr (15%) 0.21 mil mt/yr (15%) N.A.
YNCC 1.9 mil mt/yr 0.4 mil mt/ yr (5-10%) 0.4 mil mt/ yr (5-10%) N.A.
LG CHEM 1.9 mil mt/yr 0.57 mil mt/yr (10%) 0.96 mil mt/yr (16%) Constant increase
HONAM 1.75 mil mt/yr 0.52 mil mt/yr (10%) 0.96 mil mt/yr (18%) 2008
SK INNOVATION 0.88 mil mt/yr 0.48 mil mt/yr (15-20%) 1.05 mil mt/yr (40%) 2010
SAMSUNG TOTAL 1 mil mt/yr 0.45 mil mt/yr (15-20%) 1.2 mil mt/yr (40%) 2010
OVERALL 7.9 mil mt/yr 2.63 mil mt/yr 4.78 mil mt/yr
Maximum cracking volumes jumped by a
massive 82% after revamps and they also built
storages to crack more LPG if the price is right!
10
LPG CRACKING - CHINA PDH
Operation Company Propane Requirement (mt/yr)
2013 SEP
2013
2013 & 2014
2013
2013
2014
2014 & 2015
2015
2015
Tianjin Bohua Petrochemical Co 720,000
Zhejiang San Yuan Petchem Co 540,000
Jiangsu Zhangjiagang/Ningbo Oriental Energy 790,000 + 790,000
Jiangsu Changjiang Gas Chemical 780,000
Shandong Yantai Wanhua Polyurethanes Co 750,000
Zhejiang Ningbo Haiyue 720,000
Zhejiang Satelite Petrochemical Co 540,000 + 900,000
Jiangsu Zhangjiagang Yangtze Petchem Co 720,000
Fujian Quanzhou Meide Coating Co 790,000
Total by 2015 8,040,000
Operation Company Propane Requirement (mt/yr)
2017
N/A
N/A
Jiangsu Zhangjiagang Yangtze Petchem Co 720,000
Jiangsu Taxin SP Chemicals 1,200,000
Guangdong Zhanjiang Pengzun Energy 360,000
Post 2015 2,280,000
11
SHIFT IN FEEDSTOCKS - SPLITTER
Splitter Country Capacity (b/d)
Existing Units Existing Units Existing Units Existing Units Existing Units Existing Units Existing Units Existing Units Existing Units Existing Units Existing Units Existing Units Existing Units Existing Units Existing Units Existing Units
Australia 19,500
China 290,000
India 25,000
Indonesia 100,000
Japan 124,500
Korea 160,000
Malaysia 74,000
New Zealand 30,000
Pakistan 3,000
Qatar 146,000
Saudi Arabia 225,000
Singapore 70,000
Taiwan 73,000
Thailand 140,000
UAE 630,000
Vietnam 5,000
Upcoming Units
(2013-2016)
Upcoming Units
(2013-2016)
Upcoming Units
(2013-2016)
Upcoming Units
(2013-2016)
Country Capacity (b/d)
Korea 359,000
Qatar 146,000
Singapore 100,000
Vietnam 5,000
12
!
Fractionation capacity
doubling 2009-2014
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Storage over 200 million
barrels
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Two waterborne export
terminals
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Historical global clearing
market
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Most transparent pricing
0
500
1000
1500
2000
2000-2009 2010 2011 2012 2013 2014
Enterprise Targa
Oneok Phillips 66
Lone Star Chevron Phillops Chemical
ExxonMobil
MB Fractionator Expansions
2000-2014
mb/d
MONT BELVIEU - LARGEST NGL HUB
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100,000-150,000 spot physical barrels of propane traded daily
TET
!
Lone Star (LST)
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Pipeline into NE inland markets
Non-TET
! Enterprise, Houston Ship Channel
! Propane for petrochemical markets
Low-ethane propane for export
other
Non-TET
! Targa, Galena Park Terminal
! Second largest storage capacity
! Waterborne import/export facility
MONT BELVIEU - LARGEST NGL HUB
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! Target loading rate 5,000bbl/hr
! De-ethanizer at Cedar Bayou
! Segregated storage capacity
! Current exports 3.6-3.7 million
barrels/month
! Loading rate 6,000 bbl/hr -> 12,000
bbl/hr (4Q 2012)
ENTERPRISE
2013: 9-10 VLGCs / month
2014: 12-13 VLGCs / month
3Q 2013: 3-4 VLGCs / month
3Q 2014: 6-7 VLGCs / month
TARGA
! 2014: Terminal at Houston Shipping
Channel
! Loading rate 15,000-20,000 bbl/hr
CP / OXY / TRANSMON.
! 1Q 2013: export terminal at Coastal
Caverns
! 3-6 million tonnes / year
VITOL
MONT BELVIEU - EXPORT EXPANSION
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PROPANE
Saudi CP OPIS MB non-TET CP/MB Di!
$/MT $/MT
MONT BELVIEU - ATTRACTIVE TO ASIA
16
Mont Belvieu
cif ARA
Sonatrach SP
Saudi CP
FEI
20 days
14 days
Panama Canal Expansion
~2015
22-25 days*
10-15 days
MONT BELVIEU - MORE ATTRACTIVE
17
MONT BELVIEU - GAME CHANGER?
The expansion of Panama
Canal will make US LPG and other
NGL more impactful
Industry needs to consider
new global inter-linking prices that is
transparent and consistent
18
THANK YOU !
19
Q & A
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