The global liquefied petroleum gas (LPG) market size was 278 million tons in 2015. Increasing government initiatives in emerging economies such as China, Indonesia, and India to encourage LPG applications on account of its extended benefits as a cooking fuel are expected to drive the market growth over the forecast period.
UK Liquefied Petroleum Gas (LPG) Market Revenue By Source, 2014 - 2024, (USD Million)
The product has emerged as one of the principal fuel sources in residential & commercial sectors for cooking and heating applications replacing the conventional coal and wood fuels. This may be attributed to the numerous benefits such as non-toxic, easy accessibility, portable, clean, convenient, and cost-efficient as compared to coal and wood.
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.
Various regional governments are also encouraging the product use by offering subsidies on cylinders. Expanding autogas use as a major alternative transportation fuel is further expected to drive the industry growth owing to its environment-friendly nature. Liquefied petroleum gas offers considerable environmental advantages characterized by low greenhouse and particulate matter emissions as compared to the conventional fuels. Increasing carbon emission levels coupled with associated health problems are driving the need for a sustainable energy solution.
Low crude oil and LNG prices over the past two years have had serious implications on the production costs particularly in the U.S. and Canada. Domestic unavailability of the fuel coupled with the lack of consumer awareness especially in some the economies of Asia Pacific and Africa have remained the key challenges for the industry expansion.
Technological advancements in the form of improving the energy efficiency of the existing equipment along with rising number of government initiatives to educate the suburban and rural populations regarding the benefits of LPG are expected to play a significant role in uplifting product demand over the forecast period.
Refineries were the largest source for liquefied petroleum gas production while accounting for over 40% of the total market in 2015. An average of around 3% of the total crude oil is transformed to produce LPG in a typical refinery.
Expanding LNG infrastructure and trade in countries including the U.S., China, India, Australia, Japan and South Africa have eased the product availability. Expanding refining capacities, especially in India, China, Brazil, Saudi Arabia, and UAE, are expected to increase product supply over the next eight years.
Non-associated hydrocarbon reserves accounted for a significant revenue share and are expected to witness the fastest growth over the forecast period. The U.S. shale boom has emerged as major trend resulting into oversupply in the global industry. In addition, shale gas developments in China have also accounted for sufficient product supply to meet the demand globally. The industry has witnessed significant field developments in unconventional hydrocarbon basins coupled with expanding on-site processing facilities primarily in the U.S., Canada, China, and Russia.
Residential/commercial sector dominated the global demand and accounted for over 45% of the total volume in 2015. Favorable government initiatives and subsidies to promote the product as the major alternative fuel to the conventional counterparts including coal and wood fuel has been the major factor contributing towards market penetration.
LPG is also replacing hydrofluorocarbon and chlorofluorocarbon as a refrigerant owing to minimal contribution towards ozone depletion. This has led to increased application scope in the residential and commercial sector in heating & ventilating applications in addition to the conventional cooking uses. The segment is also estimated to witness the fastest growth over the next eight years to reach a net global market worth exceeding USD 72 billion by 2024.
Auto fuel is also expected to witness significant growth in near future owing to increasing alternate fuel demand in the transportation sector to minimize environmental concerns such as carbon emission levels and pollution levels. In addition, it is one of the cheapest energy sources, which is making it suitable over diesel and gasoline in the global transportation industry. The sector is anticipated to grow at an estimated CAGR of 4.8% from 2016 to 2024 in terms of value in Germany.
Asia Pacific LPG led the global industry with a net demand exceeding 90 million tons in 2015. Population expansion, abundant resource availability, and high energy requirements coupled with easy affordability owing to the presence of government subsidies on cylinders have been the major factors responsible for high market penetration.
Asia Pacific LPG market is anticipated to witness the highest growth over the forecast period. Increasing product demand as a major cooking fuel especially among the sub-urban and urban households in almost all key economies is expected to propel future growth. This is further supported by the expanding petrochemical capacities in China, India, South Korea, and Thailand.
Mature economies of North America and Europe are anticipated to witness sluggish growth owing to increasing consumer awareness towards reducing reliance on fossil fuels to gain the overall carbon credits.
The global liquefied petroleum gas market is characterized by the presence of several regional manufacturers and independent distributors along with various multinational conglomerates. The global industry is fragmented in nature and is expected to attract a large number of regional participants over the forecast period. Major market players include ExxonMobil Corporation, Royal Dutch Shell, Philips 66, Reliance Industries Ltd. (RIL), Chevron Corp., CNPC, Sinopec, BP, Petroleos de Venezuela, and Valero Energy.
The majority of the companies have been focusing on expanding their auto fuel capabilities owing to rapidly increasing fleet count primarily in the Asia Pacific and Europe. Some of the other initiatives undertaken by the companies include long-term collaborations with distributors and auto-OEMS for sustainable supply over the next few years.
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