WEEK 97: LPG Insider Report
Prices on the international market for LPG sloped downward from the middle of the week while the domestic markets for LPG rose continuously in the immediately preceding week
- The international prices of LPG ended up increasing after several initial drops from the beginning of the previous week.
- Depot prices were also on the risen note in the preceding week with a maximum of N550.00 per kg in the previous week.
- The market gaps between prices at the depot and those at the international level continued to widen as number of depot that loaded LPG shrank.
- In the week under review and the previous two weeks, price variations in LPG per kg remained within a narrow range.
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Within the Nigeria region, regional variations in LPG retail prices continue to exist.
The regional variation in LPG prices across Nigeria has been a recurring feature of the Nigerian LPG industry. The South West area has the lowest rates due to its closeness to the coastal region.
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- Inflation Rate and the LPG: Over the last 5 months, the rate of inflation has been steadily decreasing. It fell from 17.01% in August to 16.63% in September 2021. (Fig D). From 18.17 in March 2021 to 18.12 in April 2021. The anticipated inflation rate for the month of September is 16.80%. The monetary measure put in place by the monetary authorities contributes to the fall in the rate of inflation trend. The composite food index reduced to 20.3% in August 2021 from 21.03% in July. It was 22.95% in March 2021 to 22.72% in April 2021, 20.57% in January 2021, 19.56% in December 2020, 15.48% in July 2020 compared to 15.18% in June 2020.
- Exchange Rate and the LPG: In line with widening discrepancies in the parallel market, the Central Bank of Nigeria's (CBN) adjusted the exchange rate to fine-tune the forex market. (Figure E). Movement in the exchange rate along the same line was increased and ranged from 411.17 to 411.29/US$1 in the previous week. One of the factors that influence the price of LPG on the international market is the exchange rate. Since more LPG is imported, a lower exchange rate has little impact on the selling price of LPG on the local market.
- Crude oil price and the LPG: The price of LPG is positively related to the price of crude oil since it is sometimes a by-product of crude oil. The Prices of crude oil in the international market continued to fall but ended up rising in the previous week (Figure F). The cost of LPG increases as the price of crude oil rises on the international market. This suggests a high LPG market price.
- Foreign Reserves: The Nigerian Gross Foreign Reserve rose from $41.59 billion to $41.72 billion last week. Despite a rise in the reserves, the exchange rate was ranged from 410.87 to 410.91 in the previous week. This is positively correlated to the crude oil prices that continued to rise till the end of the week. An increase in the reserve might be a result of the increase in the prices of crude oil over the preceding week.
- PMI: The CBN Purchasing Managers Index (PMI) recorded overall growth in employment, business and inventory in the month of December while ordering in the category of supply for power, gas, steam and air conditioning remained stagnant while business operation & inventory were static in the same month at 45.7 per cent.
- Covid-19: Covid-19 causes demand of goods and services to fall due to the full or partial lock-down effect. The implication of the Covid-19 contracts the LPG market
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Inflation Rate and the LPG: Over the last 5 months, the rate of inflation has been steadily decreasing. It fell from 17.01% in August to 16.63% in September 2021. (Fig D). From 18.17 in March 2021 to 18.12 in April 2021. The anticipated inflation rate for the month of September is 16.80%. The monetary measure put in place by the monetary authorities contributes to the fall in the rate of inflation trend. The composite food index reduced to 20.3% in August 2021 from 21.03% in July. It was 22.95% in March 2021 to 22.72% in April 2021, 20.57% in January 2021, 19.56% in December 2020, 15.48% in July 2020 compared to 15.18% in June 2020.
- Exchange Rate and the LPG: In line with widening discrepancies in the parallel market, the Central Bank of Nigeria's (CBN) adjusted the exchange rate to fine-tune the forex market. (Figure E). Movement in the exchange rate along the same line was increased and ranged from 411.17 to 411.29/US$1 in the previous week. One of the factors that influence the price of LPG on the international market is the exchange rate. Since more LPG is imported, a lower exchange rate has little impact on the selling price of LPG on the local market.
- Crude oil price and the LPG: The price of LPG is positively related to the price of crude oil since it is sometimes a by-product of crude oil. The Prices of crude oil in the international market continued to fall but ended up rising in the previous week (Figure F). The cost of LPG increases as the price of crude oil rises on the international market. This suggests a high LPG market price.
- Foreign Reserves: The Nigerian Gross Foreign Reserve rose from $41.59 billion to $41.72 billion last week. Despite a rise in the reserves, the exchange rate was ranged from 410.87 to 410.91 in the previous week. This is positively correlated to the crude oil prices that continued to rise till the end of the week. An increase in the reserve might be a result of the increase in the prices of crude oil over the preceding week.
- PMI: The CBN Purchasing Managers Index (PMI) recorded overall growth in employment, business and inventory in the month of December while ordering in the category of supply for power, gas, steam and air conditioning remained stagnant while business operation & inventory were static in the same month at 45.7 per cent.
- Reducing the effect of the Covid-19, entails more campaign and public awareness of the virus as people are easily carried away and relaxing. Vaccines for Covid-19 should be distributed without much delay if available.
The prices in the weeks to come may rise due to pressure on the US supply of butane couple with the increase in the price of goods and services in the country
The Nigerian LPG market is the next success story of the Global LPG industry, if you need a partner with a global perspective and local expertise in the Nigerian and African space, kindly book a free session with our team of experts to help you http://www.kiakiagas.com/book-session or write us an email at advisory@kiakiagas.com or Whatsapp: +2348085269328
Week
97
A daily feature of the Nigerian LPG market was regional variance in LPG prices across the country. Because of the in price speculation and living style, the LPG South-West region has the highest price.
Covid-19: Covid-19 causes demand for goods and services to fall due to the full or partial lock-down effect. The implication of the Covid-19 contracts to the LPG market
Reducing the effect of the Covid-19, entails more campaign and public awareness of the virus as people are easily carried away and relaxing. Vaccines for Covid-19 should be distributed without much delay if available.
Regional disparity in the prices of LPG across the country has been a regular feature of the Nigerian LPG market. There is a wide gap between the South East and South-west prices, this is due to its distance from the coastal region, has the highest prices due to distance from the coastal regions.
The prices in the weeks to come may rise due to the the pressure of LPG export on the US
The Nigerian LPG market is the next success story of the Global LPG industry, if you need a partner with a global perspective and local expertise in the Nigerian and African space, kindly book a free session with our team of experts to help you 
Reuters reported in line with the International Energy Agency, that A global energy shortage is predicted to increase oil demand by 500,000 barrels per day, stoking inflation and delaying the global recovery from the COVID-19 pandemic. As a result of significant energy shortages in Asia and Europe, oil and natural gas prices have recently skyrocketed to multi-year highs, sending electricity costs soaring to new highs. Higher energy prices are contributing to inflationary pressures, which, combined with power outages, could result in less industrial activity and a slowed economic recovery.
According to Reuters, due to rising energy prices, Americans will pay more to heat their homes this winter than they did last year, according to the US Energy Information Administration's (EIA) winter fuels outlook released on Wednesday. Natural gas is used by over half of American houses for heating, and the average cost for those homes is predicted to increase by 30% to $746 from the same time last year. Energy prices have grown dramatically over the world, producing power shortages in major economies such as China and India. Even though fuel prices, from natural gas to heating oil, have surged to multi-year highs and will affect household finances as the weather turns colder, the United States has yet to suffer the same effect.
Reuters reported on Wednesday that oil prices fell on concerns that crude demand might stall, eroding recent gains that had pushed prices to multi-year highs in recent sessions. Some traders are likely taking profits in US crude after West Texas Intermediate (WTI) futures touched their highest level since October 2014 over the last three days, according to analysts. Brent futures dropped 24 cents, or 0.3 percent, to $83.18 a barrel, while WTI crude in the United States sank 20 cents, or 0.3 percent, to $80.44.
Reuters reported Industry on Wednesday that Singapore LNG Corp is inquiring about buying LNG cargoes on the spot market, a rare step for the operator of the city-liquefied state's natural gas (LNG) terminal. Four sources claimed SLNG is shopping for LNG on the spot market privately, with one of them saying it was looking for up to two cargoes for delivery into Singapore in November. It was unclear why SLNG was looking for the cargoes or whether the request was firm.
Reuters reported Industry on Wednesday that Singapore LNG Corp is inquiring about buying LNG cargoes on the spot market, a rare step for the operator of the city-liquefied state's natural gas (LNG) terminal. Four sources claimed SLNG is shopping for LNG on the spot market privately, with one of them saying it was looking for up to two cargoes for delivery into Singapore in November. It was unclear why SLNG was looking for the cargoes or whether the request was firm.
Cheniere Energy, Inc. has announced that Cheniere Marketing, LLC, a wholly-owned subsidiary of ENN Natural Gas Co., Ltd., has entered into an LNG Sales and Purchase Agreement (SPA) with ENN LNG (Singapore) Pte Ltd.
ENN LNG has committed to buy about 0.9 million tpy of LNG from Cheniere Marketing on a free-on-board basis for a period of approximately 13 years, starting in July 2022, under the terms of the SPA. The SPA's LNG purchase price is based on the Henry Hub price plus a predetermined liquefaction cost. The SPA is backed by ENN Natural Gas, which is serving as a guarantee.
United Energy has agreed to buy a 140-mile natural gas pipeline in Wagoner County, Oklahoma, that was formerly held by Red Fork Energy. This asset includes 140 miles of 3" to 16" transmission lines, a 12" steel pipeline with a capacity of up to 20 MMcfd, 5,000 acres of leasehold, and 89 company-owned wells with significant Woodford Shale development potential. Closing is scheduled for October, pending completion of final due diligence. The Wagoner Pipeline's acquisition also throws up a slew of chances for stranded gas that hasn't been able to take advantage of current commodity prices.
According to Reuters, as part of its efforts to reduce carbon emissions, Australia's New South Wales state announced on Wednesday that it would pay A$3 billion ($2.2 billion) in incentives to attract hydrogen projects to the country's largest coal-exporting state. Matt Kean, the state treasurer and energy minister, said the plan will not only help the state cut carbon emissions in half by 2030, but also provide opportunities for heavy industry and improve the economy by more than A$600 million. The state's main inducement is a 90 percent reduction in power network prices for electrolysers built by 2030.
Reuters reported that Saudi Aramco has requested banks to arrange a loan in the $12 billion to $14 billion range for buyers of its gas pipeline network, according to sources, as the oil giant moves on with plans to generate funds through asset sales. According to Reuters, Aramco might raise at least $17 billion through the sale of a major minority stake in its gas pipelines. The stake would be sold with a loan financing package worth around 80% of the purchase price already in place. According to three sources familiar with the situation, banks that financed Aramco's $12.4 billion acquisition of its oil pipelines earlier this year received a call for offers from the business last week.
According to the Marine and Petroleum Nigeria, Sahara Group, a leading energy and infrastructure company, would invest over $1 billion to improve access to liquefied petroleum gas (LPG) across Africa and emerging nations, in order to accelerate the continent's energy revolution. This was revealed by Temitope Shonubi, Executive Director of the Sahara Group, at the African Refiners and Distribution Association (ARDA) conference 2021 in South Africa, where he spoke on the importance of LPG in Africa's energy transition. Nigeria, Senegal, Ghana, Cote d'Ivoire, Tanzania, and Zambia are among the countries selected for the storage tanks, according to him, with five others in the preliminary stages.
The regional variation in LPG prices across Nigeria has been a recurring feature of the Nigerian LPG industry. The South West area has the lowest rates due to its closeness to the coastal region.
The prices in the weeks to come may rise due to pressure on the US supply of butane couple with the increase in the price of goods and services in the country
Reuters reported that theNational Grid said in its winter gas outlook on Thursday that the UK has enough gas supply capacity to fulfill demand this winter, although the electricity system operator warned of limited power supplies. The gas outlook analysis comes after wholesale gas prices in the United Kingdom surpassed 3 pounds ($4) per therm for the first time this week, having risen by about 500 percent since the beginning of the year, in tandem with increasing global energy prices. Because gas contributes for around 40% of electricity generation in the UK, high gas costs have also pushed up power prices. This has resulted in increased bills for consumers and businesses this winter, and has also contributed to the failure of many small firms..
Reuters reported on Thursday that National Security Adviser to Joe Biden asked energy providers to increase flows to meet demand, saying the US was concerned about their failure to do so.
Low supplies and rising demand have spurred skyrocketing gas prices, with the European benchmark up nearly 600% this year as economies recover from the COVID-19 crisis.
"The United States is concerned that, for a variety of reasons, supply is not keeping up with recovering demand," Jake Sullivan said after meeting with European Union officials in Brussels to discuss the gas issue.
Reuters reported that Oil prices increased on Friday, heading for a 4.2 percent weekly gain on evidence that some businesses are switching from high-cost gas to oil, as well as worries that the US government will release oil from its strategic reserves for the time being.
At 0122 GMT, US West Texas Intermediate (WTI) oil futures were up 84 cents, or 1.1 percent, to $79.14 a barrel. Brent crude futures increased by 80 cents, or 1%, to $82.75 a barrel.
In a letter, Commonwealth Bank analyst Vivek Dhar said, "Oil prices climbed after the US Energy Department declared it has no plan 'at this moment' to draw into US strategic oil reserves to moderate the increase in oil prices."
Following the delivery of its 50th LNG cargo from its first FLNG facility, the PETRONAS floating LNG SATU, PETRONAS has reached another milestone in floating LNG (FLNG) technology (PFLNG SATU).
On September 25, 2021, the milestone cargo was successfully loaded onto MISC Berhad's Seri Cemara LNG vessel for shipping to Taiwan. The 50th cargo is a significant milestone for PETRONAS, an industry pioneer, and illustrates the viability of offshore gas production using FLNG technology. In 2017, the Kanowit gas field off the coast of Sarawak produced the first FLNG cargo.
When it was transferred from the Kanowit gas field to its current position off-shore Sabah in 2019, PFLNG SATU became the world's first FLNG facility to effectively generate LNG from two remote gas fields.
TotalEnergies is publishing the Environmental, Safety and Health Impact Assessment (ESHIA) and biodiversity implementation strategy of the Arctic LNG 2 project, in which the Company holds a direct and indirect 21.64 percent stake, on its website, in line with its guiding principle of transparency in sustainable development and engagement with civil society.
Arctic LNG 2 has defined a set of actions that will be implemented based on the ESHIA and in accordance with the most stringent international performance standards in order to minimize the environmental and social footprint and to have a positive impact on biodiversity and the surrounding communities.
Liquefied natural gas (LNG) prices in Asia surged last week, owing to a continuing power shortage in China and low inventory in Europe, which increased competition for super-chilled fuel.
The average LNG price for supply to Northeast Asia in November is expected to be over $37 per metric million British thermal units (mmBtu), up nearly 16% from the previous week.
Prices for December delivery were expected to be around $38 per mmBtu. The Japan-Korea-Marker (JKM) of price agency S&P Global Platts, which is commonly regarded as a benchmark in the spot market, reached a new high of $56.326 per mmBtu on Wednesday before dropping later in the week.
Teekay LNG Partners L.P. and Stonepeak, a renowned alternative investment business specializing in infrastructure and real estate, have announced a merger agreement and strategy.
For US$17.0 million, Stonepeak-managed investment vehicles will acquire all of Teekay LNG's issued and outstanding common units representing limited partner units, including approximately 36.0 million common units owned by Teekay Corporation, and 100 percent of Teekay's ownership in Teekay LNG's general partner, Teekay GP L.L.C., which includes an economic ownership interest equivalent to approximately 1.6 million Teekay LNG common units.
EIG Global Energy Partners, a U.S. private equity group, made a binding offer for Petrobras' TBG and TSB natural gas pipelines in Brazil on Monday.
Natural gas from Bolivia is transported through the 2,593 km (1,611 mile) TBG pipeline and the far southern TSB pipeline by Brazil's state-owned oil business, Petroleo Brasileiro SA.
According to the source, EIG made its binding offer on its own. If EIG's proposal is successful, the company is still in talks with Enbridge and Fluxys about a potential partnership that would invest in and operate the project.
Dominion Energy announced on Tuesday that it has reached an agreement to sell the Questar Pipeline to Southwest Gas Holdings Inc. for $1.975 billion. Southwest Gas would gain a northward extension of its natural gas operations as well as a boost to its regulated business as a result of the transaction. The agreement comes after activist investor Carl Icahn wrote to Southwest Gas on Tuesday, encouraging the firm to forego the acquisition and instead focus on increasing its stock price. According to the company's website, Southwest Gas serves more than two million residential, commercial, and industrial customers in most of Arizona and Nevada, as well as areas of northeastern and southeastern California.
THE Federal Government claims that the newly enacted Petroleum Industry Act (PIA) will increase Nigeria's oil production capacity by 317 percent, to four million barrels per day (bpd), from its existing level of 1.2 million bpd.
Minister of State for Petroleum Resources, Chief Timipre Sylva, revealed this in his keynote speech at the 2021 Seplat Energy Summit in Abuja yesterday, saying that this will allow the oil and gas sector to contribute more to the economy. Sylva further stated that the government has rejected the concept of a single pathway to energy transition and net zero carbon, stating that energy transition is a process, not an end point.
The Nigerian LPG Market is the next success story of the Global LPG industry, if you need a partner with a global perspective and local expertise in the Nigerian and African space, kindly book for a free session with our team of experts to help you 
Reuters reported on Friday that Russia's Gazprom announced that it has begun transferring gas to Hungary and Croatia via the TurkStream pipeline.
Russia's gas supplies to Hungary via the TurkStream pipeline have irritated Ukraine, which has lost part of its transit income and is no longer able to import reverse flow gas from Hungary.
The Kremlin also said on Friday that German officials were still working on certifying the Nord Stream 2 natural gas pipeline to Germany. The CEO of German utility Uniper has stated that an operational license for the undersea pipeline would not be provided swiftly.
On Friday, Reuters reported that the European gas prices soared to all-time highs as Russia tightened supply, suggesting increased pricing pressures on European consumers as the winter heating season approaches.
According to data from grid operator Gascade, Russian gas deliveries via the Yamal-Europe pipeline decreased by about 77 percent on Friday compared to Thursday, as Kremlin-controlled Gazprom booked only a third of its available capacity for October.
The decline comes at a critical time for Europeans, who are dealing with rising electricity expenses and a supply shortage.
Oil prices continued to rise from Tuesday, hitting $76 for the first time since July 2021, owing to rising gasoline demand. The increase was fueled by a massive drop in US crude stocks as well as production issues in the Gulf of Mexico.
Brent crude, Nigeria's benchmark, rose nine cents, or 0.1 percent, to $76.28 a barrel, while West Texas Intermediate (WTI) crude rose four cents, or 0.1 percent, to $72.27 a barrel, following data from the US Energy Information Administration (EIA) showing the country's crude stocks fell by 3.5 million barrels to 414 million barrels through September 17, the lowest total since October 2018.
PETRONAS LNG Ltd, a PETRONAS subsidiary, has agreed to provide three carbon-neutral LNG cargoes from the PETRONAS LNG Complex (PLC) in Bintulu, Sarawak, to China's Shenergy Group Company Limited.
Between October 2021 and March 2022, PETRONAS will transport the first carbon-neutral LNG to China, to Shenergy's facilities in Shanghai. PETRONAS delivered its first carbon-neutral LNG cargo to Japan last month.
"PETRONAS is happy to enhance our 15-year cooperation with Shenergy that now includes the provision of carbon-neutral LNG, highlighting our commitment to provide decarbonised LNG solutions to the market," said Shamsairi Ibrahim, PETRONAS Vice President of LNG Marketing & Trading.
Gasum bunkered LNG to Le Commandant Charcot, PONANT's latest LNG-fueled new-build polar explorer, on September 24 in the port of Le Havre, France. This was Gasum's first LNG delivery in France, as well as the port of Le Havre's first LNG bunker operation.
Gasum, a French energy business, has delivered LNG as a maritime fuel to La Compagnie du PONANT (PONANT), a luxury cruise line based in Le Havre, France. On September 24, 2021, the LNG was delivered to PONANT's newly built polar explorer Le Commandant Charcot during its first call to a French port.
This bunker operation was Gasum's first LNG delivery in France, and it marked another step forward in the company's expansion.
Following a request from Bulgargaz, the Balkan country's principal gas provider and public supplier, Bulgaria's energy regulator said on Friday that it has granted a 36.2 per cent rise in the wholesale natural gas price starting in October.
Natural gas prices have surged this year in Europe and the United States, driving up fuel costs, increasing inflationary pressures, and threatening to erode consumer confidence.
The price surge is due to low storage inventories, rising gas demand in Asia, less Russian and liquefied natural gas (LNG) supply to Europe than usual, high carbon pricing, and outages.
Royal Dutch Shell is scheduled to sell its Permian Basin assets to ConocoPhillips for $9.5 billion in cash, marking the company's withdrawal from the country's largest oilfield. The company is now focusing on the sustainable energy transition.
Earlier this year, the business announced that it would begin a massive divestiture of its Nigerian assets, particularly those in shallow water and onshore, in a deal that might be one of the largest ever in the African oil and gas industry.
Chief Timipre Sylva, Minister of State for Petroleum Resources, and Shell executives have affirmed that talks are progressing, despite a recent report claiming that certain snags were delaying the talks.
Qatar Petroleum has signed a long-term Sales and Purchase Agreement (SPA) with CNOOC Gas and Power Trading & Marketing Limited, a subsidiary of China National Offshore Oil Corporation (CNOOC), for the sale of 3.5 million tonnes per annum of LNG beginning in January 2022.
CNOOC and Qatar have been working together since September 2009, when the first LNG cargo was delivered to CNOOC in China. Qatar has delivered a total of 715 LNG cargoes to China as of August 2021, with 270 cargoes (more than 24 million t of LNG) going to CNOOC.
His Excellency Mr. Saad Sherida Al-Kaabi, Minister of State for Energy Affairs and President and CEO of Qatar Petroleum, and Mr. Wang Dongjin, Chairman of CNOOC, signed the SPA in a virtual ceremony.
Reuters reported that BP (BP.L) and Eni (ENI.MI) are looking to fund up to $2 billion for their new oil and gas joint venture in Angola, as part of a debt-reduction strategy to assist grow renewables, banking, and industry.
In May, BP and Eni revealed that they were in talks to merge their Angolan oil, gas, and liquefied natural gas (LNG) activities to become one of Africa's largest energy corporations. Spinning off oil and gas assets is considered as a method for companies to get more value out of them as they aim to minimize greenhouse gas emissions and migrate to renewable energy sources.
It' is also considered as a means for the parent firm to transfer debt to the independent joint venture, making it easier for the parent company to raise funds for low-carbon ventures. BP and Eni have approached a number of major Western banks in recent weeks to obtain ideas for a $1.5-$2 billion capital raise for the joint venture.
A daily feature of the Nigerian LPG market was regional variance in LPG prices across the country. Because of the in price speculation and living style, the LPG South-West region has the highest price.
Regional disparity in the prices of LPG across the country has been a regular feature of the Nigerian LPG market. There is a wide gap between the South East and South-west prices, this is due to its distance from the coastal region, has the highest prices due to distance from the coastal regions.
