The Liquefied Petroleum Gas (LPG) has emerged as a principal source of fuel for cooking and heating applications in residential & commercial sectors replacing the conventional coal and wood fuels. It is also replacing hydrofluorocarbon and chlorofluorocarbon as a refrigerant owing to minimal contribution towards ozone depletion. This has led to an increased scope for its application.
Applications of LPG are found in various sectors such as industrial, commercial, agricultural and transportation. In the chemical industry, LPG is commonly used as a feedstock and has naphtha as its competitor. The usage of LPG as feedstock in petrochemical production is increasing due to increased supply and dropping shipping costs which has made LPG an increasingly cost-effective feedstock option over naphtha. The usage of LPG as an alternative has been gradually rising over the last couple of years.
Key drivers such as cost saving, government incentives and emission norms are expected to drive the growth of LPG market. LPG demand, particularly in the residential sector, is anticipated to witness high growth especially in the emerging economies of BRICS as more households are expanding their energy mix as a reaction to the ever-escalating electricity tariffs.
Also the surge of LPG use across Asia has led to the rising exports of LPG from key producers such as the United States, Russia and the Middle East which has seen an increase in LPG trade worldwide by about 18% year on year with the U.S. accounting for more than 35% of the exports. India and China will continue to lead Asian demand. It will be interesting to see whether LPG pricing and supply dynamics have any significant impact on the pricing of naphtha.
These countries can supply LPG in bulk amount due to their Key industry participants that are scattered in these regions. They are China Gas Holdings Ltd, Chevron, ExxonMobil, Sinopec, Petredec LPG, Phillips 66, Oman Oil Company, Reliance Industries Limited (RIL) & Oil and Natural Gas Corporation Ltd.
LPG has wide area for its application which will cause Asia Pacific LPG market to witness the highest growth over the forecast period. Due to various Government scheme and also due to increasing product demand as a major cooking fuel especially among the sub-urban and urban households, are the driving factor for LPG growth.
LPG - essentially a by-product was very often flared. However, the increased value of and demand for LPG, coupled with the undesirable environmental impact of flaring, have justified the significant investment in the storage and distribution of LPG. Due to all these factors, LPG market expected to reach USD 147.76 bn by 2024.