Global LPG Shipping and Pricing Trending Topics November 2017 1
Market snapshot Total LPG Production 305 million tons Highest ever level 5-year market growth 18% Twice as fast as crude oil growth Top Producer USA 68 million tons Top Exporter USA 35 million tons Top Consumer China 48 million tons Top Importer China 14 million tons Top consuming sector Domestic 44% November 2017 2
Market snapshot [VALUE]Mt / [PERCENTAGE] [VALUE]Mt / [PERCENTAGE] NZ consumption [VALUE]Mt / [PERCENTAGE] [VALUE]Mt / [PERCENTAGE] [VALUE]Mt / [PERCENTAGE] Automotive 9kg 45kg Forklift Bulk Global consumption November 2017 3
Market snapshot LPG fleet 1 410 vessels Versus 12 662 oil tankers VLGC s 5-year Fleet Growth 71% Current fleet 259 Vessels on order 15 Pressurized ships 5-year Fleet Growth 12% Current fleet (< 2k cbm) 605 Vessels on order 5 November 2017 4
Order Book Ordering Trend Young Fleet Pressurized Market : 3500 to 5000 cbm Sector Firm 6 Ships only 7500 cbm and above Over half the fleet less than 10 years old T/C Rates Rapid recovery East up 25% Trade Increasing Newbuilding LPG and Petchem volume growth Steel prices up: yards slots hard to find Source: Fearnresearch November 2017 5
Natural disasters : 2017, one of the worst US West Coast ports November 2017 6
Global LPG Trade Global Volume in million tons Evolution (in %) 2017 93 + 3% 2016 90 + 6% 2015 85 + 14% 2014 75 + 21% 2013 62 Regional flows 2013 2014 2015 2016 2017 Middle East 51 48 44 44 39 USA 15 19 26 29 32 80 70 60 100 80 60 40 20 0 Volume in million tons 50 40 30 20 10 0 2013 2014 2015 2016 2017 USA Middle East 2013 2014 2015 2016 2017 November 2017 7
Arbitrage European Indexes (Platts, CIF, SH) Saudi CP Argus FEI Mount Belvieu
Weak Arbitrage Propane FOB USA USD 527/Mt NWE USD 544/Mt Freight : USD 30/Mt Arb Close 13 SEA / China USD 590/Mt Freight : USD 60 Arb Open +3 European Indexes (Platts, CIF, SH) Saudi CP Argus FEI Mount Belvieu
Price Differentials - US & Far East Saudi CP versus Opis MB (in usd/mt) 1400 1200 1000 800 600 400 200 0-200 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Saudi CP (in usd/mt) Opis (in usd/mt) Spread CP vs MB November 2017 10
Good news for Power Generation Saudi CP versus FOB Singapore Gasoil 10ppm (in usd/mbtu) 14.00 13.00 12.00 11.00 10.00 9.00 8.00 Saudi CP (in usd/mmbtu) Gasoil 10 ppm FOB Singapore (in usd/mmbtu) November 2017 11
Keep an eye on.. Propane/Butane Market Divergence Ethane Trade threat or no threat Power Generation a promising proposition November 2017 12
Compliance cost - New IGC Code (SOLAS) - Code on Noise Level (SOLAS) - Ballast Water Management Convention (new convention) - Energy Efficiency Design Index EEDI (MARPOL) - NOx Tier III (MARPOL) - SOx Global Sulphur Cap 0.5% (MARPOL) November 2017 13
Panama Canal a game changer? - The new Panama Canal opened to traffic on 26th June 2016 - In the first 12 months of operation there were approx 1 500 transits of which : - 1/3 of the trafic was LPG transits made by VLGCs (defining the increase in trade between the USA and Asia) - 1/2 of all transits were container ships - Comparison : - Old Canal traffic 40 ships per day - New Canal traffic 4 ships per day - Constraints: - Limited Capacity - Inflexible pre-booking system favouring liner trades (containers) not tramp (LPG) November 2017 14
Market perception Crude Oil USD 57 per barrel 0% WTI forward average in 2021 CP USD 380 per mt 34 % Forward Propane swap average in 2021 Delivered Far East USD 397 per mt in 2021 3 33 % Forward Index average value for 2021 Opis Mount Belvieu USD 311 per mt 38 % Forward USA market average value 2021 Delivered Far East minus Opis MB USD 66 per mt 11 % Spread differential to 2021 Henry Hub USD 3.15 per mmbtu 0.6% Natural Gas in 2021 November 2017 15
THANK YOU! November 2017 16
Disclaimer The information in this presentation was compiled from sources believed to be reliable for informational purposes only. The information contained is intended solely for your personal reference. Such information is subject to change without notice, its accuracy is not guaranteed. Geogas makes no representation regarding, and assumes no responsibility or liability for, the accuracy or completeness of, or any errors or omissions in, any information contained herein. In addition, the information contains projections and forwardlooking statements that may reflect the Company s current views with respect to future events and market forecasts. These views are based on current assumptions which are subject to various risks and which may change over time. No assurance can be given that future events will occur, that projections will be achieved, or that the Company s assumptions are correct. It is not the intention to provide, and you may not rely on this presentation as providing, a complete or comprehensive analysis of the Company's financial or trading position or prospects. November 2017 17