Growing US exports of LPG to South America
U.S. sales of liquefied petroleum gas (LPG) to Latin America have quintupled since 2007, edging out more expensive exports from countries such as Saudi Arabia and Algeria, according to official data and traders.LPG comes from natural gas liquids which has shown increased supply because of the shale boom in Texas. This has to have a positive effect on the US balance of trade as we begin to export more from the shale boom. It also reflects the continued decline in Venezuela production because of the inefficiencies of their command economy and the incompetence of leadership in that country which seems more focused on exporting dope.
With imported volumes surging fast and no domestic projects expected to open soon to produce cooking gas, Latin America's financial outlays for LPG, which governments subsidize for consumers, are expected to grow.
A lack of industrial capacity and stagnant natural gas production in Latin America means there is too little LPG to satisfy voracious demand, while the shale boom in the United States has created a growing surplus.
"The U.S. is now Latin America's natural supplier of LPG. Venezuela used to supply several Central American and Caribbean countries, but that's not happening anymore," said an industry consultant who declined to be identified because they advise LPG importers.
In addition to their close proximity to Latin America, U.S. producers are offering lower prices than other major exporters. That has prompted Brazil and Chile, two big buyers, to sign supply contracts with U.S. providers, traders and industry sources said.
The switch is benefiting the main U.S. LPG players, Targa Resources Partners and Enterprise Products Partners , which plan to add 400,000 bpd in export capacity by 2018.