10 Jiwon Chung

8/12/2019 10 Jiwon Chung

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JIWON CHUNG

MANAGING DIRECTOR

OPIS ASIA

FUTURE OF ASIANLPG PRICING

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INTRODUCTION TO OPIS

! OPIS began covering petroleum newsin1977 with thelaunch of the award-

winning Oil Express Newsletter.

! In 1980, OPIS pioneered "rack" price discovery for thousands of wholesalers, and

now maintains theworld's most comprehensive database of U.S. wholesale

petroleum prices, receiving more than 70,000 rack prices each day.

! In 1981, OPIS began providing spot price assessments for all refined products.

Today, OPIS spot gasoline, diesel and jet fuel prices arehighly benchmarked in theU.S. West Coast and other key markets. OPIS'refinery feedstocks and LPG prices

are also considered a preferred benchmark by many U.S. and internationaltraders.

! 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

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WHAT IS IMPACTING LPG PRICE?

Naphtha

Regional Exports Arbitrage

Motor Fuel

Petchem Heating Fuel

Crude Oil

Cooking Fuel

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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

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SHIFT IN AG LPG EXPORT

IranKuwaitUAEQatar Saudi Arabia2011

30-35 million mt

Going Forward

35-40 million mt by 2015

Dominant AG Exporters

! 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

! Saudi Arabias LPG production will go up, but it may supply more volume to

domestic pethem plants

! Kuwaits LPG export would increase with new project but the growth may be lagged

behind Iran

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SHIFT IN ASIA LPG IMPORT

South East AsiaChina IndiaSouth KoreaJapan

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?

! Overall LPG import will go down in Japan but residential/commercial demand will

sustain with refining 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 sectorwill boost its import

! India and South East Asian imports will continue grow with economy and regulation

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SHIFT IN PETROCHEMICAL FEEDSTOCK

! North East Asia petchem producers structurally dependent onME Naphtha

! Chinas top petrochemical feedstock shift to Naphtha

! Middle East producers export price hike a"ects Asian

petchem producers

! 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

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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

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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 builtstorages to crack more LPG if the price is right!

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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

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SHIFT IN FEEDSTOCKS - SPLITTER

Splitter Country Capacity (b/d)

Australia 19,500

China 290,000

India 25,000

Indonesia 100,000

Japan 124,500

Korea 160,000

Malaysia 74,000New 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)

Country Capacity (b/d)

Korea 359,000

Qatar 146,000

Singapore 100,000

Vietnam 5,000

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! Fractionation capacitydoubling 2009-2014

! Storage over 200 million

barrels

! Two waterborne export

terminals

! Historical global clearing

market

! Most transparent pricing 0

500

1000

1500

2000

2000-2009 2010 2011 2012 2013 2014

Enterprise TargaOneok Phillips 66Lone Star Chevron Phillops ChemicalExxonMobil

MB Fractionator Expansions

2000-2014mb/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)

! Pipeline into NE inland markets

Non-TET

! Enterprise, Houston Ship Channel

! Propane for petrochemical markets

Low-ethane propane for export

otherNon-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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Saudi CP OPIS MB non-TET CP/MB Di!

$/MT $/MT

MONT BELVIEU - ATTRACTIVE TO ASIA

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Mont Belvieu

cif ARA

Sonatrach SP

Saudi CP

FEI20 days

14 days

Panama Canal Expansion~2015

22-25 days*

10-15 days

MONT BELVIEU - MORE ATTRACTIVE

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MONT BELVIEU - GAME CHANGER?

The expansion of PanamaCanal will make US LPG and other

NGL more impactful

Industry needs to consider

new global inter-linking prices that is

transparent and consistent

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THANK YOU !

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Q & A

10 Jiwon Chung

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