TOKYO: Japan’s liquefied petroleum gas (LPG) imports from the United States are expected to double in 2017 to a record and account for around for around half of its total purchases, government and shipping data showed. The surge comes as shale oil and gas output lifts overall U.S. production to rival that of Saudi Arabia and Russia.
As with crude oil, the American exports displace LPG from the Middle East, where regional top producer of crude and LPG Saudi Arabia is losing market share, not least due to knock-on effects from the efforts led by the Organization of the Petroleum Exporting Countries (OPEC) to cut production in order to prop up prices. LPG, a byproduct of crude oil and natural gas production, is a mixture of propane and butane and is used for cooking and as a transport fuel. It is also an important feedstock for the petrochemical industry.
With the United States not participating in any cuts, its LPG exports to Japan could hit almost 6 million tonnes by the end of 2017, shipping data in Thomson Reuters Eikon showed, virtually doubling the volumes within just one year. “U.S. imports are good for Japan from the energy security and diversification points of views,” said Akira Yanagisawa, senior analyst at Institute of Energy Economics, Japan (IEEJ).
American LPG now meets half of Japan’s total supplies, pushing the Middle East out of the top spot. And with U.S. oil output soaring by 80 percent since 2010 to almost 10 million barrels per day (bpd), and production expected to rise further, more American LPG is set to flood markets. The U.S. Energy Information Administration (EIA) expects U.S. crude output to exceed 10 million bpd next year. Many analysts believe as well that U.S. production could rise further than the EIA’s outlook, potentially rivalling levels of top producers Russia and Saudi Arabia, who currently pump 11 million and 10 million bpd, respectively.
