The top three players in the global liquefied petroleum gas (LPG) market, which are ExxonMobil Corporation, Royal Dutch Shell, and Sinopec Ltd., accounted for 12.3% of the market in 2013, finds Transparency Market Research (TMR) in a new study. Other players in the market include Valero Energy Corporation, BP plc, Petróleos de Venezuela, and Chevron Corporation. The degree of competition is likely to rise from medium to high as players take advantage of their strategic location and branding. Storage, transportation, and bottling infrastructure are a must in order to compete effectively in the market, recommends TMR. The threat of substitutes is likely to rise from low to medium on account of the growing demand for compressed natural gas (CNG) and liquefied natural gas (LNG).
According to the report, the global liquefied petroleum gas market is expected to rise in value from US$259.2 bn in 2015 to US$299.1 bn by 2020. On the basis of source, the associated gas segment and non-associated gas segment are both expected to account for 37.5% of the market by 2020. By end use, the residential and commercial segment will continue to remain dominant in the global liquefied petroleum gas market through 2020. On the basis of geography, the Middle East and Africa led in 2013 and will continue to do so, representing 34.7% of the market by 2020.
Increasing Consumption by Residential Sector to Drive Liquefied Petroleum Gas Market
LPG finds a wide range of applications in the agriculture, residential, and automobile sectors. A high replacement potential coupled with significant government subsidies has made LPG one of the most widely adopted fuels in the residential segment. The adoption rate is especially high in Asia Pacific, Latin America, and Africa. While Africa had a 94% adoption rate in the residential segment, for Latin America it was 70%, and Asia Pacific around 69% in 2013. The growing rural population across regions has been showing a remarkable adoption rate of LPG.
Government initiatives to promote LPG cylinder usage is likely to boost adoption rates. For instance, in India, the Rajiv Gandhi Gramin LPG Vitaran program is one of the initiatives that helps in encouraging and supporting the low cost distribution of LPG cylinders in the rural areas of the country. Similarly, in Africa, large-scale marketing and awareness programs propagating the benefits of LPG are to be launched in the near future.
Volatility in Crude Oil Price to Affect LPG Price
The fluctuation of crude oil prices affects the price of LPG. This is because the refinery production of LPG is directly dependent of crude oil. This impact of this restraint is expected to become weak in the coming years owing to the increasing production of LPG from non-associated gas. According to the report, countries such as Argentina, China, Brazil, Colombia, and the U.S. have a high scope of shale gas production and this will increase the volume of domestic LPG production through the non-associated gas category. “Large-scale production of shale gas will significantly reduce the dependence on imports from other countries and could provide attractive opportunities for the LPG sector,” states a TMR analyst.
This information is based on the findings of a report published by Transparency Market Research, titled “Liquefied Petroleum Gas Market - Global Industry Analysis, Size, Share, Growth, Trends and Forecast, 2014 - 2020.”
The global liquefied petroleum gas market is segmented as follows:
LPG Market: Source Analysis
- Associated Gas
- Non-Associated Gas
LPG Market: End User Analysis
- Petrochemical and Refinery
LPG Market: Regional Analysis
- North America
- Middle East & Africa
- South & Central America
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