LPG Shipping Outlook Special focus on India

INTERTANKO – Gas Forum Singapore 2016

RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

Reshamwala Shipbrokers Estb. 1948

LPG Shipping Outlook Special Focus on India Prepared for INTERTANKO GAS FORUM Singapore 2016 Prepared by Reshamwala Shipbrokers, India

Reshamwala Shipbrokers Estb. 1948

DISCLAIMER: This presentation is for information purpose only and should not be seen as a trading recommendation or a solicitation to trade. Opinions expressed here are subject to change without notice. The information provided here has been obtained from available date and sources from the industry. Efforts are made to try and ensure accuracy of data however, Reshamwala Shipbrokers and/or any of its affiliates and/or employees accept no liability whatsoever for any direct or consequential loss arising from the use of this presentation. This presentation should not be distributed or otherwise reproduced. Reshamwala Shipbrokers Pvt. Ltd.

RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

Reshamwala Shipbrokers - Established in 1948 - Pioneered shipbroking in India - Presently one of India’s largest shipbroking companies - Involved in segments of Tankers, Gas (LPG + LNG), Dry bulk, Chemicals, Palm Oil, Offshore, Research, Projects and Sales & Purchase - Entered into the LPG business in 1975 RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

Global LPG Production 90 80

Global LPG Production for 2015

70

Million Tonnes

60 Iran 50

UAE Qatar

40

Saudi Arabia Other OPEC

30 20 10 0 OPEC

Russia

USA

RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

Others

• OPEC @ 80.50 million tons Saudi Arabia @ 25 million tons Qatar @ 11 million tons UAE @ 11.5 million tons Iran @ 8 million tons Rest of OPEC @ 25 million tons • Russia @ 12 million tons • USA @ 55 million tons • Others @ 33 million tons Source : In-house Data, EIA

Global LPG Supply % wise break down of LPG supply

USA Exports over the years

100%

300000

90% 80%

250000 U.S Lat.Am

60%

Med. 50%

WAF N.Sea

40%

SEAsia 30%

In 1000 barrels

% of total supply

70%

200000

150000

100000

MEG

20%

50000

10% 0 2009

0% 2010

2011

2012

2013

2013

2015

RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

2010

2011

2012

2013

2014

2015

Source : In-house Data, EIA, Thomas Reuters

Middle East LPG Exports 40 35

Million Tonnes

30 25

UAE Iran

20

Qatar Kuwait

15

• Supply from the Middle East Gulf was down about 1.2% in 2015, due to reduced supply from Qatar, Iran and Bahrain

Saudi Arabia

10 5 0 2008

2009

2010

2011

2012

2013

2014

RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

2015

Source : In-house Data, Platts

Global LPG Seaborne Demand Global Seaborne LPG trade

80 70

Million Tonnes

60

Americas

50

Africa

40

Med

30

Northern Europe

• Decrease in Far East Asian demand has been balanced by Chinese and Indian imports • China and India have together imported about 5.5 million tons more LPG in 2015 than the previous year

20 Asia-Pacfic 10

• Together they accounted for 45% of Far East imports

0 2010

2011

2012

2013

2014

RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

2015

Source : In-house Data, ICIS, • Europe and Latin America Platts have seen a slight increase of imports in 2015

Far East LPG Demand 50

• Deliveries into East accounted for about 46.78 million tons; up 7% from the previous year

45 40

Million Tonnes

35 30

Others China

25

Korea India

20

Japan 15 10 5 0 2009

2010

2011

2012

2013

2014

RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

2015

• Whilst Japan, Korea and the rest of Asia saw a reduction in imports, China and India saw an increase in imports • China’s imports were up about 70% and India’s imports were up about 7% from the previous year • US is likely to increase its LPG export volumes. The VLGC cargo movement in 2015 grew Source : In-house Data, ICIS 18% and is estimated to grow another 13% this year.

LPG Gas Fleet VLGC LGC MGC Handy SGC Total

Present Fleet No. of Mn. Vessel CBM s 221 17.84 24 1.39 72 2.55 96 1.98 298 2.31 711 26.07

Orderbook No. of Mn. Vessel CBM s 69 5.72 2 0.12 43 1.62 35 0.74 26 0.24 175 8.44

Number of Vessels 2015

2016 YTD

2016 Rest

2017

2018

2019

35 3 3 7 24 72

23 0 4 2 7 35

28 2 10 15 12 67

30 0 29 18 12 89

7 0 3 2 2 14

4 0 1 0 0 5

On order as % of existing fleet 32.08 8.63 63.31 37.31 10.44 32.37

• Due to continuous rise in LPG markets through 2014 – 2015; LPG tonnage to the tu the existing fleet was ordered – still to be delivered

RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

Source : In-house Data

LPG Fleet Age Profile 90 80 70 OB

60

0-4 years 50

5-9 years 10-14 years

40

14-19 years 20-24 years

30

25+ years 20 10 0 SGC

Handy

RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

MGC

VLGC

Source : In-house Data

Current Market Slump Annual Average BLPG rate 100

90000 92.249

90

91.911 80000

$ 79,544

80

$71,365

70000

70

60000

$/Pmt

60

55.5

55.948

59.205

120 50000 100

50 40

35.254

$32,263

40000

39.29

$37,081 $32,255

$ 31,227

30000

30 22.02 20 10

• 2014 and 2015 amongst best years witnessed by ship Owners, where the BLPG index was in excess of US$ 90 pmt • Illustrating 2016 saw a steep LPG decline market in 2015/1 BLPG Index

0

40

10000

20

0 2009

2010

2011

2012

2013

2014

2015

RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

2016 YTD

60

20000 $17,224

$8,052

80

0 Jan

Source : In-house Data, Baltic 2015q1 Exchange

Feb

March 2016 q1

India’s LPG Consumption 24,000,000 22,000,000 4.85%

20,000,000 10.5%

5.36%

19.6

20.6

18,000,000 18.0

21.6

16,000,000 16.3

14,000,000

15.4

15.6

14.3

12,000,000

10.47%

• At 19.55 million metric tons (2015-16), India stands at 5 position as a global consumer

4.7%

13.1 1.6%

12.2

• Over the past 5 years India’s LPG consumption has grown 27.37%

7.1%

10,000,000

• This growth is attributed to the development of India especially the rural areas

9.1%

8,000,000 7.7%

6,000,000 1.5%

4,000,000 2008-09

2009-10

2010-11

LPG Consumption

2011-12

2012-13

2013-14

2014-15

Growth Since Previous Year

RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

2015-16

2016-17

2017-18

Expected LPG Consumption

Source : In-house Data

India’s LPG Production 11,000,000 10.6 10.3

10,000,000

10.03 9.83

9,000,000

10.8% 9.33

9.62

7.72% 9.84

9.55

2.03%

8,000,000

2.93%

7,000,000

6,000,000

-6.96%

-0.72%

2010-11

2011-12

-1.91%

• India’s LPG Production has over the past years remained more or less flat at around 10 million tons per annum • Although there are new refineries on the anvil, India’s consumption is growing at a much rapid pace

5.27%

5,000,000 2008-09

2009-10

LPG Production

2012-13

Growth Since Previous Year

2013-14

2014-15

2015-16

Expected LPG Consumption

RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

Source : In-house Data

India’s LPG Imports 9,500,000 6.37% 29.12% 8,500,000

9.07 8.53

4.99%

7,500,000 29.13%

8.69%

6,500,000

• 2nd largest importer in Asia after China – who stands at 12.095 million metric tons

6.60

64.70%

6.29

5,500,000

• In 5 years since 2011, India’s LPG imports have grown almost 51.99% to 9.07 million tons

5.79 4,500,000

• In India, LPG is primarily imported by Public (Government) Sector Companies

4.48 3,500,000

12.17% -14.47%

2,500,000 2.43

2.72

2008-09

2009-10

1,500,000 LPG Imports

2010-11

2011-12

2012-13

2013-14

Growth Since Previous Year

RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

2014-15

2015-16

Expected LPG Consumption

• About 1.7 million tons imported Source by private : In-house companies in 2015-16 Data

Sourcing of LPG – by PSU’s 4,500,000 4,000,000

Sourcing of LPG by Supplier 2015-16 (for PSU)

3,500,000

IOC

HPCL

BPCL

TOTAL

KPC

462,000

195,000

156,000

813,000

Saudi Aramc o ADNOC

1,202,00 0

370,000

1,000,00 0

2,572,000

504,000

480,000

300,000

1,284,000

Taswee q TOTAL

1,889,00 0 4,057,00 0 53.74%

630,000

360,000

2,879,000

1,675,000

1,816,00 0 24.06%

7,548,000

3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000

22.19%

0 KPC

Saudi Aramco

BPCL

HPCL

ADNOC

IOC

RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

Tasweeq

Source : In-house Data

100%

Port-wise LPG Imports 2,000,000 1971 kt

1,500,000

• Out of India’s 9.08 million imports;

1603 kt 1421 kt

• WCI accounted for about 46% ( 4.16 million metric tons) of total imports

1287 kt 1,000,000

782 kt

• New Mangalore @ 1.603 million tons

706 kt 532 kt

483 kt 236 kt

52 kt

4 kt

West Coast India Ports

Haldia

Vizag

Ennore

Tuticorin

New Mangalore

JNPT

Pirpav/ Mumbai

Pipavav

Dahej

Sikka

0

East Coast India Ports

RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

Port Blair

500,000

• ECI accounted for about 54.2% (4.92 million metric tons) of total imports • Haldia @ 1.97 million tons Source : In-house Data

Map illustrating India’s LPG receiving facilities

RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

Source : In-house Data

India’s Spot LPG Liftings Number of Indian LPG Spot Liftings through the years (as per enquiry)2010 2008date of 2009

2011

2012

2013

2014

2015

VLGC

2

6

19

22

38

53

89

110

2016 Jan-May 22

LGC MGC Handy Size

2 2

8 24 24

16 38 49

13 18 29

9 13 12

7 9 8

7 22 7

3 26 16

10 2

TOTAL

6

64

122

82

87

91

125

155

34

Company-wise Spot Liftings (as per date of enquiry)2015 VLGC LGC MGC Handy Size TOTAL

IOC 60 3 23 15 101

HPCL 15 3 18

2016 (Jan-May)

BPCL 25 1 26

RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

TOTAL 100 3 26 16 145

IOC 16 5 2 23

HPCL 4 4

BPCL 2 5 7

TOTAL 22 10 2 34 Source : In-house Data

Indian PSU - Time Chartered fleet IOC BPCL HPCL TOTAL

VLGC

MGC

SGC

4 2 3 9

3 2 1 6

1 1 2

SemiRef 1 1

• 2016 has seen lesser number of spot cargoes, primarily due to the growth of Indian PSU Time Chartered fleet. • In 2016; the Company’s in-chartered 4 VLGC’s and IOC is in the market for 1 up to 3 more vessels for a period of 12 + 12 months

RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

Source : In-house Data

The Way Ahead • Panama Canal opening June 2016 for VLGC’s – reducing ton mile for USG – East trade & potentially dividing market into AG and USG • Continuous decrease in Far East demand for LPG • Present VLGC fleet around 220 vessels with 69 in the order book; majority will be delivered by end 2017 • Out of the 220 VLGC’s, about 38 are over 20 years in age, hence see little volume being scrapped • Slump in the market may assist for vessels being demolished but unlikely to offset the influx of tonnages • 2016 has seen lowest average BLPG in the past 6 years, averaging about US$ 39 thus far; and will continue to be under pressure with the tonnage inflow RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

• India has a large rural population with limited access to cooking and heating fuels; Government intends to bring LPG to every household • By 2020; LPG demand is expected to touch 24 million metric tons • More and improvised LPG import handling terminals – Ennore, JNPT, Mangalore • Larger pipeline grid • Increased tankage – Ennore, JNPT, Kandla, Haldia • More bottling capacity – 182 million customers in FY 2015 – up 51% since FY 2010 RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

India’s LPG Consumption, Production, Imports – on the anvil 30.0

25.0 21.8 22.5 20.0

18.4

19.7

23.9

23.3

10.3

5.0

6.6

9.8 8.5

24.8

20.8

15.0

10.0

24.3

10.6 9.1

10.8 10.6

10.8 11.5

12.3

11.0

12.6

12.0

11.2

11.2

2018-19

2019-20

2020-21

12.9

11.2

0.0

2013-14

2014-15

2015-16

2016-17 Consumption

2017-18 Production

2021-22

Imports

• As you can see with India’s increasing imports, will only increase the seaborne trade • India’s struggle with infrastructure development absorbs tonnage into waiting, and hence high turn around time • As India continues to grow, so will her demand for LPG RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)

Source : In-house Data

Ajay Reshamwala Reshamwala Shipbrokers Reshamwala Shipbrokers Estb. 1948

www.reshamwalashipbroke rs.com

RESHAMWALA SHIPBROKERS, MUMBAI – DELHI (NCR)