1. LPG MARKET: ISSUES & CHALLENGES
APRIL 2011
SOHAIL A. QURAISHI
CHIEF EXECUTIVE
SHV Energy Pakistan

2. LPG GLOBAL MARKET Total Size of World Market
Year Million Tons
Year Million Tons
Total Size of Pakistan Market
Year Sales were 552,000 Tons (*)
This is 0.25% of World Market
It is at a low level of about 3.1 Kg/Capita
SHV Energy Pakistan
(*) Source: Energy Year Book

3. LPG PER CAPITA CONSUMPTION (KG)
SHV Energy Pakistan
Source: World LPG Association Statistics

4. GLOBAL LPG PRODUCTION TRENDS
Million Tons
Million Tonnes
SHV Energy Pakistan

5. GLOBAL LPG CONSUMPTION TRENDS
Million Tons
SHV Energy Pakistan

6. MAJOR LPG EXPORTERS Major LPG Exports are from Mid-East
In Year Million Tons
In Year Million Tons
Global Consumption in Year 2012 is 267 Million Tons
A surplus of 3 Million Tons is expected in Mid-East
SHV Energy Pakistan

7. MAJOR LPG EXPORTERS
Million Tons
SHV Energy Pakistan

8. GLOBAL CONSUMPTION BY SECTOR
Domestic and Commercial 46%
Feedstock %
Transport 9%
Industry %
SHV Energy Pakistan

9. GLOBAL CONSUMPTION BY SECTOR 2008
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10. 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.
SHV Energy Pakistan

11. LPG AVAILABILITY 649 602 583 567 552 491 452 415 SHV Energy Pakistan
Estimate
491
452
415
SHV Energy Pakistan
Source: Energy Year Book

12. LOW LEVEL OF LPG IMPORTS (2006-10)
SHV Energy Pakistan

13. PRICE ANALYSIS Heads Local ($) Imports ($) CP 844 Additional Charges
Freight Charges 65
General Sales Tax (17%)
143
155
Terminal Charges 29
PQA Royalty 4
Custom Charges – Wharfage etc. 6
Others 3
Total
987
1,106 (*)
(*) It does not include unforeseen risk factors like demurrages, products losses, currency fluctuation etc.
SHV Energy Pakistan

14. REASONS FOR LPG MARKET CONTRACTION
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 develop domestic household market
Imports Uneconomic and Uncompetitive
31% decline in local LPG Production in 5 years
SHV Energy Pakistan

15. AUTO FUEL COMPARISON – MAR’11
As of 6th Mar’11
Rs/Km
SHV Energy Pakistan
Data based on commonly used kits for use in 1000 CC Car

16. GOP POLICY CHANGES TO GROW 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 at similar prices
Clear Policy on Comparative Fuel Taxation and Pricing
Legislate against cross-filling of Cylinders
Controls on Smuggling of LPG
SHV Energy Pakistan

17. LPG COMPETITIVENESS WITH OTHER FUELS CONSUMER PRICES
Values based on BTUs
SHV Energy Pakistan
Fuel Prices as at 3rd Feb’11

18. 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 owned cylinders
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
SHV Energy Pakistan

19. 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.
SHV Energy Pakistan

20. 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 different fuels to allow investment by companies
Control Smuggling of Substandard LPG
SHV Energy Pakistan