LPG Markets in the Indian Sub-Continent

WLPGA Indian Sub-Continent Regional Summit

Walter M. Hart, Ph.D., P.E.February 15, 2012Taj Mahal Hotel, New Delhi, India

© 2011, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent. 2

Agenda

• Population

• Sub-Continent LPG Demand, Supply and Trade

• Prospects for LPG Demand Growth

2

© 2011, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent. 3

Purvin & Gertz NGL Publications, Seminars and Workshops

Short-Term Reports

Global LPG

North America NGL

Latin America LPG

Asia Light Naphtha

Long-Term Reports

LPG Market Outlook

LPG Market Outlook

LPG Market Outlook

Asian PetrochemicalFeedstocks Market Outlook

World LPG Market Outlook

North America NGL Industry

Latin America LPG Study

5-Year East of Suez MarketOutlook

Annual LPG SeminarsWoodlands, TX March 5-7

Singapore June 18-20

Lima, Peru November 12-14

NGL Workshops Offered at Each Seminar

Fundamentals of LPG Markets

Understanding NGL Feedstock Economics

© 2011, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent. 4

Indian Sub-Continent Region

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Population Comparison to World

Source: Wikipedia

PopulationRank Millions % of World

World 6,871Indian Sub-Continent 1,604 23.3%

2 India 1,210 17.6%6 Pakistan 179 2.6%9 Bangladesh 142 2.1%45 Nepal 27 0.4%46 Afghanistan 24 0.4%56 Sri Lanka 21 0.3%

165 Bhutan 1 0.0%

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The Sub-Continent Has a Relatively Rural Population

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But Sub-Continent Population Density Is Among the Highest in the World

Number of people per square kilometer

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The Sub-Continent Uses Less LPG Than Much of the Rest of the World

Source: Wikipedia

2011Population LPG Demand

Millions % of World MM Tonnes % of World kg/capitaWorld 6,871 237.5 35Sub-Continent 1,604 23.3% 15.5 6.5% 10

India 1,210 17.6% 14.7 6.2% 12Pakistan 179 2.6% 0.7 0.3% 4Bangladesh 142 2.1% 0.0 0.0% 0Nepal 27 0.4% 0.0 0.0% 0Afghanistan 24 0.4% 0.0 0.0% 0Sri Lanka 21 0.3% 0.0 0.0% 1Bhutan 1 0.0% 0.0 0.0% 0

•India dominates the Sub-Continent LPG demand

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LPG Demand in the Sub-Continent is Growing Very Rapidly

0

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1995 2000 2005 2010 2015

Mill

ion

Tonn

es L

PG D

eman

d

Bhutan Afghanistan BangladeshNepal Sri Lanka PakistanIndia

92%

0%0% 1% 1% 1%5%

Bhutan Afghanistan BangladeshNepal Sri Lanka PakistanIndia

2011

Residential / Commercial LPG is subsidized in India

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The Residential / Commercial Market Dominates the Sub-Continent LPG Demand

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1995 2000 2005 2010 2015

Mill

ion

Tonn

es L

PG D

eman

d

OtherEngine FuelIndustrialResidential / Commercial

96%

2%0% 2%

OtherEngine FuelIndustrialResidential / Commercial

2011

Residential / Commercial market uses about 70% butane

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The Autogas Market Is Relatively Small But Growing Rapidly

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Mill

ion

Tonn

es L

PG

Engine Fuel

• Mostly in India• 3-wheelers and

passenger cars• Has OEM support• <3.5% of all Indian

vehicles run on LPG• More than 900 filling

stations and growing

Photo Credit: Indian Autogas Coalition

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Indigenous Supply from the Sub-Continent Is Far Short of Demand

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4

6

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1995 2000 2005 2010 2015

Mill

ions

of T

onne

s of

LPG

SupplyDemand • Sub-Continent demand

growth is much higher than supply growth

• The supply shortage was less than 2 million tonnes per year until about 2003

• The current LPG supply shortage is more than 5 million tonnes per year, and is likely to grow to nearly 8 million tonnes per year by 2015

© 2011, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent. 13

Sub-Continent Indigenous LPG Supply is Nearly All from India and Pakistan

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2

4

6

8

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1995 2000 2005 2010 2015

Mill

ion

Tonn

es L

PG S

uppl

y

Bhutan Afghanistan BangladeshNepal Sri Lanka PakistanIndia

94%

0%0% 0% 0%0% 6%

Bhutan Afghanistan BangladeshNepal Sri Lanka PakistanIndia

2011

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Most Indigenous LPG Supply in the Sub-Continent Is Produced in Refineries

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1985 1990 1995 2000 2005 2010 2015

Mill

ion

Tonn

es L

PG D

eman

d

Natural Gas Refineries

76%

24%

Natural Gas Refineries

2011

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Nearly All of the Sub-Continent LPG Shortage Is Supplied Through Waterborne Imports

• Waterborne LPG imports arrive in India, Pakistan and Sri Lanka

• A relatively small amount may be provided via truck from Iran and the CIS

0

1

2

3

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5

6

2003 2004 2005 2006 2007 2008 2009 2010 2011

Mill

ion

Tonn

es L

PG Waterborne Energy Sub-Continent ImportsIndia ShortagePakistan ShortageSri Lanka ShortageNepal ShortageBangladesh ShortageAfghanistan Shortage

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Imported Waterborne LPG is Predominantly Butane Sourced From the Middle East

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2003 2005 2007 2009 2011

Mill

ion

Tonn

es L

PG

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%PropaneButanepct butane

0

1

2

3

4

5

6

2003 2005 2007 2009 2011

Mill

ion

Tonn

es L

PGSaudi Arabia Abu Dhabi QatarKuwait Iran MalaysiaOther

Source: Waterborne Energy

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Residential / Commercial LPG Consumption Is Increasing Rapidly on a Per Capita Basis

0123456789

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Kg per Capita

2009 Regional KG/Capital DataHigh: North America 46.60Low: Indian Subcontinent 8.10World Average: 17.47

But is still relatively (very) low…

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Rural Households in India Appear to Be Replacing Firewood With LPG

Residential/Commercial Fuel Ladder

Cow dung

Firewood

Charcoal

Kerosene

LPG

Natural Gas

Electricity

58%

12%

12%

1%

1%15%

1% Firewood

Crop Residue

Cowdung CakeCoal

Kerosene

LPG

Others

• Rural Households (72%)• Source IOC, 2009• 2001 Census showed 63%

firewood, 6% LPG• Urban Households

• 2001 Census showed 48% LPG, 19% kerosene, 22% firewood

• Low natural gas • Low electricity

© 2011, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent. 19

Sub-Continent GDP per Capita Is Among the Lowest in the World, But Improving

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India Is Improving Their LPG Infrastructure

• Attempting to increase rural LPG connections by 10 million customers per year

• Adding 60 million cylinders/ regulators by 2015• Upgrading bottling capacity

• Adding nearly 300,000 tonnes of storage capacity• 3100 km of LPG Pipelines• 2 import facilities to add a total of 1.2 million tonnes per year of import capacity

• New refineries

Source: IOC, 2011

© 2011, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent. 21

Important Challenges Remain for the Sub-Continent

•Execution of infrastructure strategy in India

• Infrastructure outside India•Subsidies / affordability / habits•Autogas

• Safe conversions / OEM support• Retail dispensing stations• Subsidies

•Market access for international companies•Peace in the western Sub-Continent

Source: IOC, 2011

© 2011, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent. 22

Conclusions• Sub-Continent population is high, but per capita LPG

consumption is relatively low• LPG demand is growing rapidly

• Dominated by residential / commerical demand• Autogas demand is relatively small but growing quickly• Industrial demand growing

• Demand growth is faster than supply growth• Local supply is mostly refinery based• Waterborne imports make up the difference

• Numerous challenges for LPG remain within the Sub-Continent, but there is great opportunity!

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Thank you for your attention!

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Contact Information

Walter M. Hart, Ph.D., P.E. wmhart@purvingertz.com

+1 832 209 4424

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