LPG procurement covers propane, butane, and propane-butane mixes traded under pressure or refrigeration, priced against Saudi Aramco Contract Price in the East and Mont Belvieu in the US. The specification that matters commercially is the C3 to C4 ratio, because it determines vapour pressure, calorific value, and whether the product performs in the destination climate.
LPG is unusual among traded fuels: the same three letters describe products with materially different physical behaviour. Pure propane vaporises at minus 42 degrees Celsius. Pure butane stops vaporising reliably around zero. A cargo sold as LPG without a stated composition is a cargo whose winter performance nobody has agreed.
For gas distributors, cylinder fillers, petrochemical feedstock buyers, and industrial heat users, LPG procurement is a discipline built on composition, pressure logistics, and terminal compatibility rather than on headline price alone.
What Is LPG and Why Composition Governs Value
Liquefied petroleum gas is a mixture of light hydrocarbons — principally propane and butane — that are gaseous at ambient conditions and liquefied under moderate pressure or refrigeration for storage and transport.
Composition drives every downstream commercial consequence:
- Vapour pressure: Propane-rich product holds higher pressure, requiring vessels and tanks rated accordingly and performing reliably in cold climates
- Calorific value: Butane carries higher energy per unit volume, propane higher per unit mass — which is why cylinder markets and bulk markets value the two differently
- Cold-climate performance: A butane-heavy mix will fail to vaporise adequately in winter, producing customer complaints that trace directly back to the purchase specification
- Petrochemical use: Steam-cracker and PDH feedstock buyers specify propane purity tightly, often above 95 percent, with strict limits on olefins and heavier components
Specification Parameters Worth Enforcing
An enforceable LPG specification states composition by component, vapour pressure at a defined temperature, and limits on sulphur, moisture, and residue — not simply the word "commercial propane".
- Component analysis: Percentage propane, butane isomers, ethane, and C5 plus heavier, determined by gas chromatography
- Vapour pressure: Stated at a reference temperature, typically 37.8 degrees Celsius, with a maximum consistent with the receiving tank design pressure
- Total sulphur: Commonly limited to 50 to 140 mg/kg depending on market, with a separate hydrogen sulphide limit
- Copper strip corrosion: Class 1 — a direct indicator of corrosive sulphur species that damage regulators and valves
- Residue on evaporation: Limits heavy carryover that fouls vaporisers and leaves oily deposits in cylinders
- Free water: None permitted; moisture forms hydrates that block regulators in cold conditions
Pressurised, Semi-Refrigerated, and Fully Refrigerated Logistics
LPG moves in three distinct logistics modes, and the mode determines vessel type, terminal compatibility, and the practical minimum cargo size a buyer can accept.
- Pressurised: Product held at ambient temperature under pressure in cylindrical vessels, typical of coasters and small parcels serving regional distribution
- Semi-refrigerated: Combined moderate pressure and cooling, offering flexibility across terminal types at mid-range parcel sizes
- Fully refrigerated: Propane at approximately minus 42 degrees Celsius at near-atmospheric pressure, the mode used by VLGC tonnage for long-haul cargoes
Mode mismatch is a common and expensive failure. A fully refrigerated cargo cannot discharge into a pressurised-only terminal without intermediate handling, and that constraint should be confirmed at the enquiry stage rather than after the fixture. Our guide to multi-modal freight optimisation covers the wider mode-selection logic.
Pricing: Saudi CP, Mont Belvieu, and Term Structure
LPG pricing follows regional benchmarks rather than a single global reference, with Saudi Aramco Contract Price dominant in Asian and Middle Eastern term contracts and Mont Belvieu governing US-origin cargoes.
- Saudi CP: Announced monthly for propane and butane separately, forming the base for many term contracts east of Suez
- Mont Belvieu: The US Gulf Coast NGL hub reference, relevant to any cargo lifted from US export terminals
- North West Europe: Assessed cargo and coaster values reflecting local balances and seasonal heating demand
- Freight: VLGC freight is volatile and can dominate the delivered price on long-haul routes, so it should be priced and reviewed as a separate line rather than buried in a delivered number
Seasonality is pronounced. Northern hemisphere heating demand lifts propane values into winter while butane tracks gasoline blending economics, meaning a mixed-product term contract carries two different seasonal exposures. Our commodity pricing benchmarks guide sets out how to structure contracts around this.
LPG Product Reference
| Product | Typical Composition | Boiling Point | Primary Application |
|---|---|---|---|
| Commercial propane | Min 95% C3 | Approx. minus 42 C | Cold-climate heating, autogas, PDH feedstock |
| Commercial butane | Min 95% C4 | Approx. minus 0.5 C | Cylinder markets in warm climates, blending |
| Propane-butane mix | Market specific, e.g. 70:30 | Composition dependent | General distribution, cylinder filling |
| Petrochemical propane | Tight purity, low olefins | Approx. minus 42 C | Steam cracking, dehydrogenation |
Frequently Asked Questions
What is the difference between propane and LPG?
LPG is the broader category covering liquefied light hydrocarbons. Propane is one specific product within that category. Commercial propane is typically at least 95 percent C3, while a product sold simply as LPG may be a propane-butane blend whose ratio must be stated in the contract.
How is LPG priced internationally?
Most Asian and Middle Eastern term contracts price against Saudi Aramco Contract Price, announced monthly for propane and butane separately. US-origin cargoes generally price against Mont Belvieu. Freight is typically quoted and reviewed as a separate component because VLGC rates are volatile.
What propane to butane ratio should I specify?
Match the ratio to the coldest ambient temperature at the point of use. Propane-rich mixes are required where winter temperatures fall near or below zero, because butane will not vaporise reliably. Warm-climate cylinder markets commonly accept higher butane fractions at lower cost.
Can a refrigerated LPG cargo discharge at a pressurised terminal?
Not directly. Fully refrigerated cargoes require compatible receiving infrastructure or intermediate handling through a terminal capable of both modes. Terminal compatibility should be confirmed before a vessel is fixed, as the alternative is a costly re-nomination.
What minimum LPG volumes does XRT handle?
Pressurised coaster parcels typically start around 1,000 to 3,000 MT, semi-refrigerated cargoes in the mid range, and fully refrigerated VLGC cargoes at approximately 44,000 MT. Structure is confirmed against destination terminal capability.
Ready to structure an LPG supply programme? Contact XRT's energy desk at energy [at] xrtgroup.com or submit a requirement through our procurement portal.