Nick Black VP LPG of Argus Media in conversation with Makoto Arahata
Can you tell us how you first got into the LPG industry?
I graduated from Rikkio University in Tokyo and joined a firm called Bridgestone Liquefied Gas (now part of Eneos Globe) in 1972. Bridgestone was a pioneering LPG importer to Japan, owning a 16,000t refrigerated LPG vessel, the Bridgestone Maru — the world’s first ocean-going LPG vessel.
The company’s involvement in LPG is interesting. Bridgestone sent Dr Yamamoto, an engineer, on a mission to the US to study the technology regarding storage and transportation of refrigerated liquefied gas (both LPG and LNG) in 1955. Bridgestone subsequently built its vessel in 1961 and an LPG import terminal in Kawasaki.
I joined Bridgestone as an engineer and helped develop a burner system for propane and butane. In 1973 I also went to US to study the various uses of LPG. One of my mentors, when I was a junior staff member, was Mr Y. Goh who later helped Stewart Kean establish the World LPG Forum.
Why did LPG become so popular in Japan?
Before LPG became popular, most of the Japanese used charcoal and firewood. In 1956, LPG demand in Japan was just 46,000 t/yr. But by 1960, demand had grown to 433,000 t/yr. LPG consumption per capita was just 4.6kg in 1960 — and is now around 128kg per capita. So about 50 years ago, the Japanese LPG market could be defined as an “Early-Stage LPG Market” according to WLPGA guidelines.
The development of the Japanese economy is one key reason why LPG demand increased — as primary energy needs grew. But pioneering efforts by firms to develop the LPG market were also crucial, including educating potential consumers about the fuel. The industry had to develop the basic appliances and the equipment for LPG, which in case of Japan included equipment for Autogas and light industrial use. The petrochemical market was another target.
How did Japan secure the LPG supply chain?
Japan’s LPG supply chain consists of LPG ocean-going vessels, import terminals, pressurised coastal vessels, pressurised secondary terminals, tank tracks through to filling stations, delivery trucks and ultimately cylinders. We call the supply chain the “mobile pipeline” and the industry aims to ensure the chain should not be broken at any time and remain secure.
We also explored new LPG supply sources to ensure supply diversity. Then as an industry we have worked hard to secure safety measures, codes and procedures. We have also worked hard to educate consumers. Securing good quality LPG has also been vital to the industry’s efforts. In the beginning, people thought that the higher the pressure of LPG was in a cylinder, the better the quality. But what really happened was that first ethane vaporised and then the pressure tended to quickly reduce, leaving residue in the cylinders. So maintaining the good and consistent quality of LPG was very important to help develop the LPG market. It was difficult to ask the manufactures to develop the innovative applications and appliances.
What market came first in Japan?
The Japanese LPG market was developed first primarily for cooking to replace traditional fuels like charcoal and firewood. Japanese housewives quickly understood how convenient LPG was for cooking. Retail fuel outlets started dealing with LPG cylinders in addition to charcoal and firewood. Those traditional fuels were replaced by LPG. Most of the fuel shops became LPG shops. The change in cooking fuel in turn led to a change in cooking stoves. This brought a change to the Japanese kitchen, which became modern. And when the kitchen changed, the Japanese life style and houses also became modern.
The Autogas industry has a long history in Japan. How did it first start and what have been its major successes?
Our Autogas industry began with importing of LPG carburetors from the US in the early 1960s. The Japanese engineers developed and modified carburettors for the taxi use. The taxi companies realized the advantages of Autogas over gasoline: the Autogas octane number was high, the prices of Autogas were competitive with conventional fuel prices and the life time of engine oil lasted longer. Furthermore, the pump price of Autogas was kept at about 60pc of gasoline prices.
Japanese car manufacturers Toyota and Nissan started supplying factory-fitted Autogas vehicles to the taxi industry. Currently about 80pc of all taxies are fuelled by Autogas. And Mazda supplies Autogas OEM vehicles to the driving schools in Japan.
There used to be problems with the quality of Autogas which caused various engine troubles. But the LPG industry co-operated with the Autogas vehicle manufacturers to successfully resolve the problems.
Do you have any favourite memories from all the WLPGA Forums you have attended?
Each WLPGA Forum has given me many good memories and a sense of togetherness of the global LPG families from the various regions, based on good communications on the WLPGA platform.
Two forums particularly stand out for me: The WLPGA Forum Chicago in 2006 and the Bali forum in Bali in 2012. At Bali, the 25th WLPGA Forum. I helped put Mr.Goh’s contributions to the WLPG Forum in the silver anniversary book prepared for the event.
Does LPG have a future in Japan?
Yes, it has. But we must realise that nothing will happen unless we innovate our LPG business like our LPG industry did in 1960s and in 1970s.
The Japanese population will reduce and energy saving technologies will improve. Those trends tell us the demand for energy will decrease. In other words, competition among the energies, electricity, city gas and LPG, will become more severe. So the price of LPG at the consumers must be competitive.
What are your views about the growing importance of US LPG exports to the Asia-Pacific? Do you think that they will eventually replace Middle East supply?
US LPG exports will certainly become much more important. But it is unlikely that US LPG will totally replace Middle East LPG. I think a 40pc penetration level will be likely in case of Japan and South Korea.