Global Liquefied Petroleum Gas (LPG) Market: Residential and Commercial Segment to Remain Key Contributors.

The global liquefied petroleum gas (LPG) market is extremely fragmented with a large number of players operating in it, states a research study by Transparency Market Research (TMR). The growing number of players entering the global liquefied petroleum gas market is likely to strengthen the competition in the next few years. In 2013, the leading players in the market, namely CNPC, Sinopec, Royal Dutch Shell, ExxonMobil, BP plc, and Valero Energy collectively held a share of 20% of the global liquefied petroleum gas market. These players are emphasizing on branding and market positioning in order to attain a dominant position in the overall market. In addition, the increasing number of mergers and acquisitions for the expansion of retailing and distribution is anticipated to contribute towards the market’s growth in the next few years.

As per the research study by TMR, in 2015, the global liquefied petroleum gas market in terms of consumption was worth US$259.2 bn and is likely to reach a value of US$299.1 bn by 2020. This market is anticipated to register a steady 3.40% CAGR between 2014 and 2020.

Asia Pacific to Maintain Dominance in Terms of Liquefied Petroleum Gas Consumption

From a geographical lookout, Asia Pacific is expected to lead the global liquefied petroleum gas market on the basis of consumption and account for a share of 36.90% by the end of 2020. This scenario is expected to remain similar throughout the forecast period, states a TMR analyst. High growth of this region can be contributed to the significant contribution from India and China. In addition, the growing consumption of liquefied petroleum gas in commercial and residential sectors is anticipated to encourage the growth of the liquefied petroleum gas market in Asia Pacific.

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On the basis of end use, the residential and commercial segment is anticipated to lead the global liquefied petroleum gas market in the next few years. This segment is likely to hold a share of 63.60% by the end of 2020, owing to its primary use as a cooking fuel. In addition, governments in several emerging economies are offering subsidiaries for liquefied petroleum gas as a cooking fuel, owing to which this segment is estimated to witness robust growth throughout the forecast period.

Growing Demand for Autogas to Supplement Market Growth

The growing demand for automotive liquefied petroleum gas (autogas) across the globe is one of the key factors estimated to encourage the growth of the global liquefied petroleum gas market in the next few years. In addition, the environmental benefits offered by autogas and favorable legislative policies for using autogas are some of the other factors driving the demand for liquefied petroleum gas worldwide.

Furthermore, the rising demand for liquefied petroleum gas in several developing economies for meeting lighting and cooking requirements is estimated to augment market’s growth in the next few years, says a TMR analyst.

Fluctuating Crude Oil Prices to Restrict Market Growth

The leading players in the global liquefied petroleum gas market; however, are facing several challenges in the market due to the volatility in crude oil prices. These raw material fluctuations result in an uncertainty of liquefied petroleum gas price, which is expected to hamper the growth of the market. Nevertheless, the possibility of Shale gas production in Latin America and Asia Pacific region and the expansion of Panama Canal boosting trade opportunities are anticipated to accelerate the growth of the market in the coming years.

This information is based on the findings of a research report published by Transparency Market Research (TMR), titled “Liquefied Petroleum Gas (LPG) Market ( - Global Industry Analysis, Size, Share, Growth, Trends and Forecast 2014-2020.”

The global liquefied petroleum gas market has been segmented as below:

Global Liquefied Petroleum Gas Market, by Source

• Refinery
• Associated Gas
• Non-Associated Gas

Global Liquefied Petroleum Gas Market, by End Use

• Residential/Commercial
• Petrochemical and Refinery
• Industrial
• Transportation
• Others

Use of LPG as Fuel in Automobiles to Drive Demand

The global liquefied petroleum gas (LPG) market is highly competitive, featuring a large number of equally balanced competitors. The top five companies accounted for 17.2% of the global market in 2013. These companies are: Exxon Mobil, Royal Dutch Shell, Sinopec, Valero Energy, and BP PLC. New entrants have a higher chance of venturing into the market through distribution and retailing businesses, states Transparency Market Research (TMR). From the perspective of large market players, the industry is relatively consolidated.

Key players have branched out into LPG storage, distribution, and retailing businesses. In essence, these players are their own suppliers, thus resulting in negligible supplier power. Large companies are adopting the strategy of gradually diversifying their LPG marketing business across many other countries. Case in point. Royal Dutch Shell, divested its LPG business in India. It aims to sell off major stakes in its LPG business in Pakistan. Similarly, BP PLC has strategically invested in exploration and production projects for oil and gas in various regions around the globe.

The access to shale reserves can give a competitive edge to a company, states a TMR analyst. This is because competition in the LPG industry highly depends on price and having access to shale reserves will enable a company to provide LPG in much cheaper rates.

Government Initiatives to Distribute LPG to Rural Areas Fuel Demand

Owing to their higher energy content and ability to burn easily as compared to other fuels, LPG, also known as autogas, is used as fuel in automobiles. The numerous environmental benefits of using autogas is another factor driving its demand. This is because autogas is considered to be greener as compared to other fuels such as gasoline and diesel. Autogas also enjoys legislative policy support and is cost-effective, thus driving its adoption.

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LPG is widely used as cooking fuel in residential sectors. The ease in transportation through pipelines, tankers, and cylinders results in the low cost distribution of LPG cylinders. Moreover, the low CO2 emission from LPG makes it one of the best fuels in the cooking sector. LPG is extensively used in the rural sector. The Indonesian government launched a conversion program and distributed LPG cylinders and gas stoves to the rural population. Similarly, the Indian government has also come up with initiatives, supporting the low cost distribution of LPG cylinders to rural sectors. All these factors contribute to the heightened demand for LPG.

Increasing Procurement of Non-associated Gas Weakens Impact of Volatile Crude Oil Prices on LPG Market

The price of crude oil is susceptible to fluctuation. This, in turn, affects the price of LPG. With the economy regaining stability after 2010, the price of crude oil, which had declined in 2009, has once again risen. This has a direct impact on the price of LPG. However, the prices of oil and natural gas is expected to decline, thus relieving the price of LPG acquired from non-associated gas from the volatility of crude oil prices. However, the growth in the production of LPG obtained from non-associated gas is expected to weaken the influence of the restraint.

Expansion of Panama Canal to Facilitate Increasing Trade Opportunities

The Panama Canal is a major waterway facilitating the trade between North America and the Rest of the World. The expansion project of this waterway is expected to benefit trade between many regions, especially North America and Asia Pacific, in late 2016, when the project is expected to be completed. With the slashed transit cost, export routes between Asia Pacific and North America will open. This will reduce the cost of LPG and the surplus production from North America will be exported to Asia Pacific, thus satisfying the latter’s growing demand for LPG. Similarly, North America is expected to export LPG to Europe owing to the drying up of the North Sea. Thus, trade opportunities are increasing with the expansion of the Panama Canal.

By end use, the residential and commercial segment led in 2013, accounting for a 63.25% of the global LPG market. The segment is expected to continue its lead in the market in the coming years. By geography, the Middle East and Africa is expected to lead in the global LPG market, followed by Asia Pacific. By source, the non-associated gas segment is expected to witness the highest growth rate in the coming years.

According to the report, the global market opportunity in liquefied petroleum gas will rise from US$233.83 bn in 2013 to US$299.05 bn by 2020, expanding at a 3.4% CAGR between 2014 and 2020.

The global liquefied petroleum gas market is segmented as follows:

Source

• Refinery
• Associated Gas
• Non-Associated Gas

End User

• Residential/Commercial
• Petrochemical and Refinery
• Industrial
• Transportation
• Others

Global Liquefied Petroleum Gas (LPG) Market’s Future Lies in Non-Associated Gas, Expected to reach US$299.05 bn by 2020

A new Transparency Market Research report states that the global liquefied petroleum gas (LPG) market stood at US$233.83 bn in 2013 and is predicted to reach US$299.05 bn by 2020. It is predicted to expand at a CAGR of 3.40% from 2014 to 2023. The title of the report is, “Liquefied Petroleum Gas (LPG) Market - Global Industry Analysis, Size, Share, Growth, Trends and Forecast 2014 - 2020.”

Liquid petroleum gas (LPG) is also called referred to as butane or propane and is a flammable mixture made composed of a number of hydrocarbon gases. It is utilized as a fuel within heating appliances, vehicles, and cooking equipment, among others. This gas, when utilized as a vehicle fuel, is often known as auto gas. This gas is extensively utilized as a refrigerant and an aerosol propellant and replaces chlorofluorocarbons for reducing the damage caused to the ozone layers. It has a number of other uses, especially its utilization in cylinders across various markets in the form of a fuel container in the sectors of hospitality, agriculture, recreation, construction, fishing, sailing, and calefaction. It also serves as a fuel for central heating, water heating, and cooking and is extremely cost-effective in nature.

The report states that the rising consumption of auto gas has resulted in the increased utilization of LPG, hence boosting market growth. In addition, the increasing population base in regions such as that of Latin America, Asia Pacific, and Africa utilizing easily available and cheap LPG in the form of fuel is also stimulating the growth of the market. The rising trade opportunities owing to the expansion of the Panama Canal and the predictable production of shale gas within regions of Latin America and Asia Pacific are amongst the prime growth opportunities in the market for LPG. On the other hand, the unpredictable prices of crude oil result in price uncertainty of LPG prices, thus restraining market growth.

In terms of source, the report segments the market for LPG into associated gas, refinery, and non-associated gas. Amongst these, the segment of non-associated gas is predicted to take the largest share in the forecast horizon. In terms of end user, the market has been segmented into petrochemical and refinery, residential and commercial, transportation, industrial, and others. Amongst these, the residential and commercial segment led the market in 2013 and represented a share of more than 60% in the market. In this segment, LPG gas is majorly utilized as a cooking fuel and also in lighting and heating.

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On the basis of geography, the report segments the market into Europe, North America, the Middle East and Africa, Asia Pacific, and South and Central America. Amongst these, the Middle East is the largest producer of LPG. On the other hand, the U.S. in North America emerged as the a net importer in 2012 and the production of LPG in North America is predicted to rise exponentially. In addition, within the U.S., the surplus production of LPG will be routed to the region of Latin America in the coming years owing to the rising demand from the commercial and domestic sectors.

As mentioned in the report, the prime players operating in the market for LPG are Exxon Mobil Corporation, British Petroleum plc., Kleenheat Gas Pty Limited, Origin Energy, Kleenheat Gas Pty Limited, Copagaz Distribuidora De Gas Ltda, SHV Energy N.V., and Repsol S.A., among others.

The global LPG market is segmented as follows:

LPG Market: Source Analysis

• Refinery
• Associated Gas
• Non-Associated Gas

LPG Market: End User Analysis

• Residential/Commercial
• Petrochemical and Refinery
• Industrial
• Transportation
• Others

LPG Market: Regional Analysis

• North America
• Europe
• Asia-Pacific
• Middle East & Africa
• South & Central America

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