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SHV Energy Pakistan
HOW to GROW the LPG MARKET in
PAKISTAN
4TH INTERNATIONAL LPG CONFERENCE
25th March 2010, Islamabad
SOHAIL A. QURAISHI
CHIEF EXECUTIVE
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LPG GLOBAL MARKET
Total Size of World Market:
Year 2008 242 Million Tons
Year 2012 270 Million Tons
Total Size of Pakistan Market
Year 2008-09 Sales was 570,000 Tons
This is 0.25% of World Market It is at a low level of 2.6 Kg/Capita
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LPG Per Capita Consumption (Kg)
75.47
28.8
18 15.512.03
7.32.6
0
10
20
30
40
5060
70
80
Ma ays a ha and an h na h pp nes nd a ak s an
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GLOBAL LPG PRODUCTION
TRENDSMillion Tonnes
Million Tonnes
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GLOBAL LPG CONSUMPTION
TRENDSMillion Tonnes
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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 267
Million Tons
A surplus of 3 Million Tons is expected inMid-East
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MAJOR LPG EXPORTERS
Million Tonnes
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GLOBAL CONSUMPTION BY
SECTOR
Domestic and Commercial 46%
Feedstock 32% Transport 9%
Industry 11%
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Global Consumption by Sector
2008
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PAKISTAN LPG MARKET
Total Market is Contracting (23%) over last four years
No. of Marketing Companies has grown From 16 in 2004 to 83 Now (Increase of +500%)
Major Conversion of Auto Market to CNG
Smuggling of Substandard LPG fromIran/Turkmenistan etc.
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LPG Sales Volume
- - - - - - 9 9-
ons
Lo al m orts
(*) Annual projections based on Jul-Dec09 volume 250 K
9
(*)
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Low Level of LPG Imports (2003 10)
Local 2%
Imports
8%
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REASONS FOR LPG MARKET
CONTRACTION CNG Market Expansion
NG Expansion in Domestic Market
4 Million Consumers in Year 2004
5.6 Million Consumers in Year 2009
Lack of Investment in Cylinders in LPG
Downstream Market
Imports Uneconomic and Uncompetitive
Decline in local LPG Production
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Auto Fuel Comparison
an Apr u
l tan A
pr ul t
an Apr u
l t
s/m
LP M AS C
Data based on commonly used kits for use in 1000 CC Car
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GOP POLICY CHANGES TO
GROW THE BUSINESS Import Parity Pricing thru reduced GST both at
Import & Supply Stage (No Revenue Loss to
GOP due to higher imports) To allow all players to have adequate volume
To control prices through competition
Clear Policy on Comparative Fuel Taxation and
Pricing Legislate against cross-filling of Cylinders
Controls on Smuggling of LPG
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LPG Competitiveness with Other
Fuels
C G FO CO L L O E O HS LPG P G ELEC
Fuel Prices as at 3rd March2010
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OGRA REQUIRED INITIATIVES
A LPG Consumer requires a safe, economic andcorrectly 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 and Sale of small non-company owned cylinders
Re-qualification of cylinders
Control Sub-standard LPG Smuggled from Iran/Turkmenistan etc
Control Decanting
*For current market conversion to domestic from Auto about 3 Million more
cylinders are required costing 5.5 Billion Rupees
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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.
Re-qualification of all LPG Vessels (Both Static / Mobile) to be
carried out only by API 510 certified inspector.
3rd Party Inspection Bodies with foreign accreditation
Only certified inspectors to be authorized by OGRA for inspection of
pressure vessels.
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Recommendations
To Grow the LPG market, support from Government and
Regulator is required for:
Increased LPG supplies thru imports by rationalizingGST structure
Safety Implementation throughout the LPG
distribution chain
Clear Policy on Tax/Price on different fuels to allow
investment by companies
Control Smuggling
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