Tokyo — Saudi Aramco introduced flexible monthly LPG contract pricing for the first time in many years in January, allowing term buyers to choose the current or next month’s contract price depending on the cargo laycan, a company official told S&P Global Platts Tuesday.
“This is pricing flexibility that we introduced to our customers starting January 2019,” said Abdullah Baltan, marketing coordinator of Saudi Aramco’s LPG sales and marketing, ahead of his speech at the International LP Gas Seminar in Tokyo.
“Basically [Aramco] gives the option to customers to have a term contract with their liftings priced on either the loading month or the following month of the loading date,” Baltan said. “So for example in March, cargoes loading in the first 10 days will be priced on March CP, while cargoes loaded 11th to the end of the month will be having the April CP.”
Baltan added that 50% of Aramco’s LPG term customers have implemented this, accounting for 45% of the company’s term volumes in 2019.
Saudi Aramco, which exported 9.2 million mt of LPG in 2018, declined to give its estimate for 2019 in the midst of OPEC/non-OPEC production cuts.
Saudi Aramco’s monthly contract prices for propane and butane to its term customers are confirmed at the end of the month, after receiving two rounds of price nominations from their term buyers for the upcoming loading month, and form the basis of LPG pricing in Asia.
The company’s CPs, which set the price of LPG lifted from the Saudi ports of Yanbu, Ras Tanura and Ju’aymah under term supply contracts, are closely watched by the market as they tend to set a base level for LPG pricing for other LPG exporters in the Middle East.
— Takeo Kumagai, [email protected]
— Wanda Wang, [email protected]
— Edited by Wendy Wells, [email protected]
Source: S&P Global Platts
