sohail_quraishi lpg market issues & challenges

8/2/2019 Sohail_quraishi Lpg Market Issues & Challenges

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SHV Energy Pakistan

LPG MARKET: ISSUES & CHALLENGES

APRIL 2011

SOHAIL A. QURAISHI

CHIEF EXECUTIVE


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SHV Energy Pakistan

LPG GLOBAL MARKET

Total Size of World Market

Year 2008 242 Million Tons

Year 2012 270 Million Tons

Total Size of Pakistan Market

Year 2009-10 Sales were 552,000 Tons (*)

This is 0.25% of World Market It is at a low level of about 3.1 Kg/Capita

(*) Source: Energy Year Book


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SHV Energy Pakistan

LPG PER CAPITA CONSUMPTION (KG)

177.4

107.4

70.4

38.4

16.1 11.1 10.13.1

USA Malaysia Thailand Iran China Philippines India Pakistan

Source: World LPG Association Statistics


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SHV Energy Pakistan

GLOBAL LPG PRODUCTIONTRENDS

Million Tonnes

Million Tons


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SHV Energy Pakistan

GLOBAL LPG CONSUMPTIONTRENDS

Million Tons


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SHV Energy Pakistan

MAJOR LPG EXPORTERS

Major LPG Exports are from Mid-East

In Year 2010 33 Million Tons

In Year 2012 40 Million Tons

Global Consumption in Year 2012 is 267Million Tons

A surplus of 3 Million Tons is expected inMid-East


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SHV Energy Pakistan

MAJOR LPG EXPORTERS

Million Tons


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SHV Energy Pakistan

GLOBAL CONSUMPTION BY SECTOR

Domestic and Commercial 46%

Feedstock 32%

Transport 9%

Industry 11%


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SHV Energy Pakistan

GLOBAL CONSUMPTION BY SECTOR 2008


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SHV Energy Pakistan

PAKISTAN LPG MARKET

Total Market is Contracting 24% over last 5 years from 649,000t to 491,000t (est.)

No. of Marketing Companies has grown

From 16 in 2004 to 89 Now (Increase of +500%)

Major Conversion of Auto Market to CNG

Smuggling of Substandard LPG from

Iran/Turkmenistan etc.


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SHV Energy Pakistan

LPG AVAILABILITY

380 412

558 583 578 507 485401

35 40

2566

2460 67

90

0

100

200

300

400

500

600

700

2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11

Local Imports

Tons

415452

583649

602567 552

Source: Energy Year Book

Estimate

491


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SHV Energy Pakistan

LOW LEVEL OF LPG IMPORTS (2006-10)

Local 92%

Imports

8%


13/20


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SHV Energy Pakistan

REASONS FOR LPG MARKETCONTRACTION

CNG Market Expansion CNG Stations 3,248

Vehicles Converted 2.5 M

NG Expansion in Domestic Market 4 Million Consumers in Year 2004

6 Million Consumers by Year 2010

Lack of Investment in Cylinders to developdomestic household market

Imports Uneconomic and Uncompetitive

31% decline in local LPG Production in 5 years


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SHV Energy Pakistan

AUTO FUEL COMPARISONMAR11

0

1

2

3

4

5

6

7

8

Jan-

07

May-

07

Sep-

07

Jan-

08

May-

08

Sep-

08

Jan-

09

May-

09

Sep-

09

Jan-

10

May-

10

Sep-

10

Jan-

11

LPG MOGAS CNG

Data based on commonly used kits for use in 1000 CC Car

As of6th

Mar11Rs/Km


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SHV Energy Pakistan

GOP POLICY CHANGES TOGROW THE BUSINESS

Regulator to check Cartelization & Price Manipulation

instead of Price Controls

To control prices through fair competition

To allow all players to have free availability of LPG atsimilar prices

Clear Policy on Comparative Fuel Taxation and Pricing

Legislate against cross-filling of Cylinders

Controls on Smuggling of LPG


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SHV Energy Pakistan

LPG COMPETITIVENESS WITH OTHER FUELSCONSUMER PRICES

-122%

-84%

-55%

-38%

-17%-17%

-12%

0%

23%

CNG COAL FO LDO HSD KERO PMG LPG ELEC

Fuel Prices as at 3rdFeb11

Values based on BTUs


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SHV Energy Pakistan

OGRA REQUIRED INITIATIVES

A LPG Consumer requires a safe, economic and correctly filled cylinder. For this:

Cylinder Cross-filling needs to be stopped by linking Company

sales to stock of cylinders available*

Correct LPG weight is filled

Ban on Manufacture & Sale of small non-company ownedcylinders

Re-qualification of cylinders

Control sub-standard LPG smuggled from Iran/Turkmenistan

Control Decanting

(*)For current market conversion to domestic from Auto about 3 Million more cylinders are required costing Rs 56 Billion


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SHV Energy Pakistan

LPG SAFETY

Compliance to Codes & Standards throughout the Distribution Chain Pressure Vessels to be manufactured with prescribed steel only

Use of genuine UL Listed valves only for LPG Plants / Vessels

LPG Tankers to comply with International standards like ADR,

COP2 and BS 7122 etc.

Inspection of LPG Vessels (Both Static / Mobile) to be carried out by

certified inspectors having international accreditation only.

Only credible Manufacturers with requisite facilities and relevant

accreditations be allowed to manufacture LPG vessels.


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SHV Energy Pakistan

RECOMMENDATIONS

To Grow the LPG market, support from Government and Regulator is required for:

Increased LPG supplies thru imports

Safety Implementation throughout the

LPG distribution chain

Clear Policy on Tax/Price on differentfuels to allow investment by companies

Control Smuggling of Substandard LPG

sohail_quraishi lpg market issues & challenges

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