LATIN AMERICA AT THE START OF 1998 was solidly in the middle of the world pack in terms of LPG production and demand.
Latin American countries were expected to account for slightly less than 12% of 1997 worldwide production forecast at 179 million metric tons (tonnes). The expected regional total was third in the world behind North America and the Middle East but ahead of Asia.
Latin America is the fourth largest LPG market in the world, behind North America, Asia, and Western Europe.
Among individual consuming countries, Mexico in 1997 was on a pace to produce nearly 8.5 million tonnes of LPG and represented the third largest LPG market in the world, consuming an estimated 8.9 million tonnes in 1996. The U.S. consumed the most with Japan a distant second.
These are some of the patterns of supply and demand that emerged from an examination by consultant Purvin & Gertz, Houston, of Latin American LPG production and consumption in comparison with the rest of the world.
The analysis defines Latin America as Mexico, the Caribbean, Central America, and South America; North America represents the U.S. and Canada.
Worldwide look
Fig. 1 shows that total world supplies of LPG grew from 162 million tonnes in 1994 toward 179 million tonnes for 1997, an increase of 10.5%. Purvin & Gertz expected world supplies to reach 203 million tonnes in 2000. Inventory changes account for differences in the supply figures and demand projections in Fig. 2.
North America is the world`s largest LPG-producing region, at more than 56 million tonnes/year.
The Middle East follows with 33 million tonnes, while Latin America slightly outdistances Asia for third place with about 21 million tonnes/year of production.
About 60% of the LPG produced in the world comes from gas-processing plants, while the remaining 40% comes from refineries.
Gas-plant production of LPG is highest in the Middle East, where almost 90% of all LPG is produced from gas plants, and lowest in Asia, where gas-plant production accounts for only about 30% of the LPG produced.
Both Latin America and North America closely approximate the world average production makeup, with roughly 60% of their total LPG production coming from gas plants.
Although North America is the world`s largest LPG-consuming region, just as it is the largest producing region, the same cannot be said for the Middle East, where demand for LPG is far less than LPG production. This is why the Middle East is the world`s largest LPG-exporting region.
In 1996, said Purvin & Gertz, Latin America`s LPG market was fourth largest among five worldwide consuming regions. North American consumption of LPG was more than double the total consumption of Western Europe or Latin America, with total demand reaching almost 60 million tonnes.
The Far East region ranked second with more than 34.5 million tonnes of LPG consumption, while Western Europe and Latin America consumed 26.2 and 24.3 million tonnes, respectively. The Middle East ranked fifth in consumption at 8.2 million tonnes.
The consultant`s review of individual countries revealed that Mexico had the third largest LPG market in the world in 1996, nearly 9 million tonnes. The U.S. was in first place, with more than 54.4 million tonnes, followed by Japan, 19.8 million tonnes.
Growing rapidly, the Chinese market in 1996 was the fourth largest LPG-consuming country in the world, with an estimated 7.3 million tonnes, almost three times greater than China`s 2.7 million tonne/year market in 1990.
Brazil (6.2 million tonnes) and Canada (5.5 million tonnes) followed China as the fifth and sixth largest LPG consumers.
LPG consumption
Fig. 3 breaks out LPG demand into consumption of propane and butane in 1996 but does not account for how much of each product was sold as a purity or specification product or as a mixed-LPG stream.
The world LPG consumption mix was about 55% propane and 45% butane. Latin America`s LPG propane/butane makeup was approximately the same as the world average.
North America consumed more propane than any region in the world, while Middle East consumption was dominated (70%) by butane, more than any market region of the world.
Western Europe was almost identical to Latin America in its consumption of propane and butane. Very little LPG in Western Europe or North America is sold in mixed form, however, but rather as purity specification products.
Purvin & Gertz said the Latin American market has a uniquely large residential and commercial sector (Fig. 4).
More than 70% of the LPG marketed throughout Latin America in 1996 was used in residential and commercial markets. Some countries, like Brazil, marketed more than 90% of their LPG to the residential and commercial sectors. An estimated 73% of Mexico`s LPG demand came from its residential-commercial market.
Only 22% of North America`s LPG sales were made to the residential-commercial market as a result of its huge natural-gas distribution system. Instead, the largest single market for LPG in North America was petrochemical production, in which LPG is used as a feedstock to make ethylene, propylene, methyl tertiary butyl ether (MTBE), maleic anhydride, and many other chemicals.
On average, about 45% of world LPG demand came from residential and commercial markets. Demand for LPG as an automotive engine fuel is very strong in Mexico, representing in 1996 about 11% of Mexico`s total market.
Although the engine fuel market is even larger in Europe, it is nonexistent in the Middle East and averaged only about 6% of the total world market demand for LPG.
Residential, commercial demand
Purvin & Gertz said world residential-commercial demand for LPG will grow from about 79 million tonnes in 1995 to 99 million tonnes in 2000 (Fig. 5).
Latin America accounted for approximately 23% of all LPG sold in world residential-commercial markets in 1995. Strong economic growth will push Asia`s share of world residential-commercial LPG demand to 33% by 2000.
Although residential-commercial demand for LPG in Latin America will certainly grow volumetrically through 2000, said Purvin & Gertz, Latin America`s relative share of world LPG demand consumed by the residential-commercial sector will slide to 21% as millions of new Asians switch over the next few years to LPG from burning biomass and coal.
In residential-commercial LPG applications during 1996, India used 3 kg/capita, Southeast Asia 6 kg/capita, and the remainder of the Far East 10 kg/capita. Latin America used 37 kg/capita, the second largest consumption rate in the world.
Exports; projects
Fig. 6, showing the largest LPG-exporting regions of the world, indicates the Middle East accounts for more than half of all LPG exports in the world. The North Sea ranks a distant second, and Africa follows close behind. Algeria accounts for the bulk of Africa`s LPG exports.
Although Latin America`s exports are shown, the region in 1998 is a net importer of LPG. Between 2000 and 2005, once several large LPG supply projects come on stream in Argentina, Peru, and Venezuela, Latin America will become a net exporter of LPG.
Table 1 shows at least 10 major LPG-supply expansions in construction or in planning stages outside Latin America and many smaller projects that will be built. Together, they will add 6.1-12.3 million tonnes of LPG supplies to the world between late 1996 and 2003, said Purvin & Gertz.
Table 2 shows new LPG supply projectscurrently under construction or in planning in LatinAmerica. New plants in Mexico,Venezuela, Colombia, Argentina,Peru,and Trinidad will total 7 milliontonnes/ year between mid-1998 and 2005.
Totalproduction from these new projectsalmost equals 57% of the total production from all projects being planned outside of Latin America.
Venezuela`s Corpoven plans to add almost 2.5 million tonnes/year of LPG production between 2000 and 2005.
In Argentina, Enron affiliate Transportadora de Gas del Sur (TGS) planned to start up a 300,000-tonne/year expansion to its huge General Cerri plant in 1998. YPF plans to build its 630,000 tonne/year Mega Project gas plant in 2002.
Shell and Mobil plan to build a plant to process gas from their huge Camisea Project in Peru that is expected to add more than 1 million tonnes/year of new production in 2002.
Colombia was expected to add between 800,000 and 1,000,000 tonnes of new gas-plant production between 1997 and 2000 based on associated gas from its huge oil fields. Plans for these new plants were on hold, however, because of politically related disruption to oil flows.
In 1997, Pemex not only got the large Cactus gas plant up and running at 100% of its original capacity but also started up a large expansion of Nuevo Pemex.
In South America, only Argentina, Venezuela, and Colombia export more LPG than they import. Total net exports from these countries were estimated at 1.6 million tonnes in 1996, with Venezuelan exports accounting for the lion`s share (Fig. 7).
By 2005, Peru will switch from being a net importer to a net exporter once Shell & Mobil`s Camisea gas plant is on stream. By 2005, large expansion programs in all four of these South American countries will push their LPG exports to more than 8 million tonnes/year.
A breakdown of LPG production in Latin America reveals that new gas-plant production projects are increasing the share of LPG production from natural-gas plants (Fig. 8).
During 1990 to 2005, said Purvin & Gertz, total Latin American LPG supplies will grow from 17.4 million tonnes/year to 34 million tonnes/year.
Over this same period, production of Latin American LPG from gas plants will increase from 55% of total production to 66%.
In 1995, Mexico was the largest LPG-producer in Latin America with an estimated 8.2 million tonnes/year from gas plants and refineries (Fig. 9).
Total production from Venezuela in 1995 was a distant second at 4 million tonnes, while Brazil was the third largest producer.
By 2005, Venezuela`s production will grow faster than Mexico`s on both a percentage and absolute volume basis: Mexico will be producing 10.4 million tonnes/year and Venezuela 7.9 million tonnes/year.
This outlook for Mexico assumes significant new investment to add 2.4 million tonnes/year of supply from gas-processing plants. Purvin & Gertz noted that Mexico has a wide variety of natural resources and abundant oil and gas reserves that hold some of the richest associated gas in the world.
Demand growth
Mexico holds the largest share of Latin American LPG demand, consuming more than 8.7 million tonnes of LPG demand in 1995-37% of all the LPG consumed in Latin America (Fig. 10).
Brazil is the second largest market, with 1995 demand estimated at 6 million tonnes, or 25.5% of all Latin American demand. Venezuela and Argentina rank a distant third and fourth, respectively.
By 2005, Latin America will have surplus LPG production after being a net importing region for many years. Total demand will rise to 30.1 million tonnes/year but fall 3.9 million tonnes short of the 34 million tonnes of estimated Latin American LPG production.
Residential-commercial markets account for most LPG use in Latin America, followed in order by the petrochemical and industrial sectors (Fig. 11).
Although LPG engine-fuel demand makes up approximately 11.3% of Mexico`s total market, Mexico remains the only country in all of Latin America with any significant consumption of LPG as vehicle fuel. Thus, auto-gas consumption accounts for only 4.2% of total LPG demand in Latin America.
Table 3 illustrates total consumption of LPG for residential-commercial use in Latin America on a kilogram-per-capita basis and includes the projected growth rates in population.
Mexico`s 1994 population was estimated at 92 million, second to Brazil with 159 million. The total population for all of Latin America in 1994 was 474 million.
Based on this population and Purvin & Gertz`s estimates of total residential-commercial demand, Latin America consumed 37 kg/capita.
Mexico ranks first in residential-commercial demand, averaging 68 kg/capita. Venezuela and Chile follow close behind at 61 and 60 kg/capita, respectively.
Brazil ranks second in total LPG consumption in South America but consumes only 34 kg/capita. This lower consumption rate results from the combination of a poor economy and warm weather.
Peru consumes 8 kg/capital. Removal of price subsidies on kerosene and an improved economy, however, make it is the fastest growing LPG market in Latin America, growing at more than 14%/year.
In 1997, five Latin American nations produced more LPG than they consumed: Venezuela, Argentina, Colombia, Trinidad, and the Netherlands Antilles.
Peru will be a surplus producer and exporter after 2002. Mexico used to export more LPG than it imported, but this is no longer the case. Demand has exceeded production in Mexico in 1990.
By 2005, Argentina, Colombia, Peru, Trinidad, Venezuela, and the Netherlands Antilles will produce 9 million tonnes more LPG than they consume.
Balances
In 1995, six major Latin American nations were importing more LPG than they exported (Fig. 12).
Colombia recently became a net LPG exporter. Peru remained an importer but will become an exporter in 2002, as mentioned earlier.
Thus, total imports by Brazil, Mexico, Chile, and Ecuador, the only four major LPG importing nations in 2005, will reach 4.4 million tonnes/year. Many smaller nations, like Puerto Rico and other Caribbean nations, remain net importers as well and make up a very small percentage of the total estimate.
Argentina`s two large new gas plants promise to make the country a major waterborne LPG exporter, with net exports rising from 414,000 tonnes in 1995 to 896,000 tonnes in 2000 and 1.5 million tonnes in 2005.
Brazil will remain the second largest LPG importer in all of Latin America, although its imports will likely decline with increases in domestic production and a slowdown in demand growth resulting from the future deregulation of the Brazilian LPG industry and the influx of natural gas imports from Bolivia.
After rising to 2.1 million tonnes in 1995, Brazilian LPG imports will fall to 1.8 million tonnes in 2000 and decline by 58,000 tonnes between 2000 and 2005.
Imports in Chile have risen dramatically in recent years with Chile`s ever-improving economy and introduction of a totally free market. Net LPG imports jumped to 407,000 tonnes in 1995 from 162,000 tonnes in 1990.
They will rise to 637,000 tonnes by 2000, then enter a period of virtually no growth as imported natural gas begins to back LPG out of Chile`s industrial sector.
Colombia has been basically balanced in recent years, said Purvin & Gertz, requiring as little as 2,000 tonnes of net imports in 1990 and as much as 66,000 tonnes in 1995.
Construction of gas plants, however, will place Colombia in the role of exporter as all of its new LPG production will be exported.
By 2000, Colombian exports could total 674,000 tonnes and rise further to 1.1 million tonnes in 2005 if plans to build gas-processing plants are implemented.
In 1997, strained relationships between Colombia and several international oil companies cast some doubt about the timing of these projects.
In Ecuador, net imports rose 50% between 1990 and 1995.
Estimated at 302,000 tonnes in 1995, Ecuadorian LPG imports will rise to 439,000 tonnes in 2000. Thereafter, demand growth will slip from current levels and result in about 516,000 tonnes of imports in 2005.
Ecuador receives all of its imports by water, mostly from the U.S. and Venezuela. The 75,000-cu m floating-storage vessel Darwin, moored at Guayaquil, receives LPG and temporarily stores it. Smaller vessels take product from the Darwin to shore for distribution.
Mexico used to have surplus LPG production, with net exports estimated at 828,000 tonnes in 1990.
Since 1990, growth in demand has made Mexico a net importer. By 1995 Mexico`s net imports rose to 416,000 tonnes.
By 2000, total net imports will reach 995,000 tonnes as a result of an improved economy and sustained growth in LPG demand. After 2000, domestic LPG production will rise with more investment in Pemex Gas y Petroquímica Básica`s gas-processing infrastructure.
New gas-plant production will cut net LPG imports to 581,000 tonnes/year by 2005.
In Peru, final development of the Camisea gas project will swing the country from a net importer of 349,000 tonnes of LPG in 2000 to an exporter of nearly 1.1 million tonnes of LPG in 2005.
This production will be sufficient to supply all of Chile and Ecuador`s needs, displacing supplies from Venezuela, the U.S., Algeria, the Middle East, and Mexico.
Venezuela`s state-owned Corpoven brought its 850,000-tonne Eastern cryogenic complex (Accro II) gas plant on stream in November 1996. Plans now call for adding two to three more huge gas plants by 2005.
These projects are expected to push total Venezuelan net exports to 2.2 million tonnes in 2000 and 4.5 million tonnes in 2005.
In the smaller South American countries of Bolivia, Guyana, Paraguay, and Uruguay total net import requirements amounted to about 106,000 tonnes/year in 1995. This is expected to grow modestly to 126,000 tonnes in 2000 and 141,000 tonnes in 2005.
Paraguay is the largest importer among these countries, requiring about 50,000 tonnes/year of imports. This will grow to 64,000 tonnes by 2005.
Central America (Belize, Costa Rica, El Salvador, Guatemala, Honduras, and Panama) imports roughly 200,000 tonnes/year of LPG. This region will remain a net importer of LPG, with total net imports rising to 254,000 tonnes by 2005.
Guatemala in 1995 was the largest LPG consumer and importer among all Central American countries, accounting for 93,000 tonnes (47%) of Central America`s import total. Guatemala`s LPG import requirements will rise modestly to 117,000 tonnes by 2005.
The Caribbean region used to be an LPG net-importing region, requiring 90,000 tonnes more imports than the region exported in 1990. Exports and imports were essentially balanced for this region in 1995.
Primarily because Trinidad is doubling its production of LPG, total net exports of Caribbean LPG will rise to 224,000 tonnes by 2000 and 257,000 tonnes by 2005.
 |
An LPG tanker takes on a shipment at Jetty No. 7 at Mexico`s Salina Cruz terminal, operated by Pemex-Gas y Petroquímica Básica. Supplies began arriving at the terminal through a new 12-in. pipeline from the refrigerated terminal of Pajaritos, State of Veracruz. (Photograph courtesy Pemex-Gas y Petroquímica Básica, Mexico City)
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
TGS` Cerri complex has received a third processing train (not shown here) that has raised its inlet capacity to more than 1.4 bcfd and improved ethane recovery.
