Australian LPG loadings take off; A Darwinian revolution

The Pacific region does not normally garner much attention in the LPG market because trade flows are typically very small relative to other parts of the world, but exports from Australia are very strong this month. Loadings in the country are up 60% in August and 23% year-over-year to 125,000 barrels per day, and would be the highest on our records if maintained through month-end. Australia accounts for around 98% of all the region's loadings.

The rise in loadings from Australia to new highs stands out, but it has also been a slowly building event. It is the result of the ramp-up of LPG shipments from the Ichthys LNG project owned by Inpex in November 2018. The project is located in Darwin in Australia's Northern Territory, and is therefore a fitting location due to its proximity to Asian demand centers. Targeted production at the development is 8.9 million tons of LNG and 1.65mn tons of LPG per year, which for LPG equates to nearly 52,000 bpd. LPG loadings at Ichthys this month are running at a pace of 77,000 bpd, so it is likely that volumes in excess of the stated production capacity are surge volumes rather than anything that is sustainable. The surge this month follows 33,000 bpd in loadings in July.