Liquigas identifying new overseas markets to stabilise domestic gas price

LPG bottler Liquigas Malta has justified its most recent price increase on gas cylinders, citing the euro's weakness against the dollar and ongoing speculation on the international market.

In a statement, Liquigas said the international liquid petroleum has price has never gone below the $800-per-tonne mark since October 2010, instead hovering around the average $950-per-tonne.

"At times, the international price increases were so high that Liquigas Malta was faced with the most difficult challenge of having no other option but to ask for a price increase after submitting the commercial workings to the Malta Resources Authority (MRA) in order to prove that such increases were justified. Each time, Liquigas proposes a new pricing structure, this has to be set according to an MRA's price mechanism formula and the authorities verify any increases," the company said in its statement.

The most recent prices from Platts LPG mix prices saw the international price of LPG breach the $1,000-per-tonne mark in January 2012.

"There were other instances during the last 12 months when Liquigas Malta absorbed the increased international costs itself. This happened on a number of occasions when no price increases were announced at the beginning of a month," Liquigas said.

But the most recent price increases affected the consumer market for the 10-15kg cylinders, with a relatively higher price hike than the increase on 25kg cylinders for industrial users.

In other parts of the world, the price of the LPG mix plummeted in April after the state-run Saudi Aramco set its contract price for propane at $990 a tonne, down $240 from the March level. The company also lowered its April butane price by $185 from March to $995 a tonne - both propane and butane form part of the LPG mix.

Referring to questions about the source of its LPG mix, Liquigas said it operated a prudent purchasing policy. "Customers today are more careful about their own energy costs and selling LPG at higher prices is definitely not the company's best option, but it is the only viable option dictated by the ruling and persistently high international prices.

"Liquigas has endeavoured to identify alternative sources of supply outside Europe to mitigate the impact on domestic LPG pricing, while keeping a contingency plan in place to acquire LPG from Italy or France to guarantee continuity of LPG supply in Malta."

Liquigas said the doubling of storage capacity at its new €20 million LPG plant in Benghisa will reduce the company's vulnerability to external pressures and guarantee adequate supplies for Malta even in difficult wintry conditions.