Liquefied Petroleum Gas (LPG) Production Cost, Price Trend, Uses And Market Dynamics

Liquefied Petroleum Gas (LPG) Defined with Applications

Liquefied Petroleum Gas (LPG) or LP gas is any of the many liquid mixtures of the unsteady hydrocarbons propane, propene, butane and butene. It has both domestic and industrial use. In a standard commercial mixture, ethane, and ethylene, as well as a volatile mercaptan (an odorant that is added to detect any leaks), are present. LPG is known as liquefied gas because it can easily change into a liquid. It is a non-renewable energy source that is derived from crude oil and natural gas. Liquified petroleum gas (LPG) is 270 times the volume of gas to liquid volume. Its boiling point is at 100°C or 212°F.

Liquified petroleum gas (LPG) is a source of energy that finds application in several household appliances for heating, cooking, etc. As it is easy to pack, condense, store and use, it is an ideal source of energy for a wide array of applications. It is used for several manufacturing applications, like as a fuel for cars, to power cogeneration plants etc. LPG is significantly used in central heating systems and is the second most used raw material for chemical plants.

Liquefied Petroleum Gas (LPG) Production

Liquified petroleum gas (LPG) Production from Natural gas: In this process, LPG is produced by natural gas processing. In this method, crude oil is recovered from the oil wells and transferred to a gas trap, separating it into wet gas and oil. Next, wet gas gets piped into a gasoline absorption plant and pumped via an absorbing oil. This oil is later separated from the mix called wild gasoline. Lastly, the wild gasoline gets further split into LPG and liquid gasoline.

Liquified petroleum gas (LPG) Production from Crude Oil: LPG is produced by using the petroleum refining process. During the process, crude oil is recovered and split into oil and wet gas via a gas trap. In the next step, the method of fractional distillation is employed to separate the compounds at distinct temperatures. Finally, the petroleum gas is evaporated under 110°C and is chilled and split to derive liquefied petroleum gas.

Liquified petroleum gas (LPG) Market Dynamics 

Liquified petroleum gas (LPG) is easy to store, making it a highly portable fuel which has a versatile use in industries located in areas where pipe gas supply is unavailable. In addition, it is more favoured than other energy fuels due to its ability to burn with lower sulfur and carbon emissions, making it more environment friendly.

In process industries, LP gas is used to fuel the boilers that generate steam and boiling water. In household applications, it is used as a cooking gas owing to its high flash point. However, the primary sector driving the LPG demand is automotive, owing to the growing need for energy-efficient fuel. In addition, LP gas finds application as a feedstock in petrochemical industries, including for the production of ethylene using the hydrocarbon cracking process and syngas production via steam conversion, which is furthering the market demand. Also, the growing consumer preference for low-cost LP gas compared to high-cost conventional fuels like petrol and diesel is boosting the industry’s expansion.

Key Players in the Liquefied Petroleum Gas (LPG) Market

• Gazprom PAO, 
• Royal Dutch Shell Plc
• Exxon Mobil Corporation
• Total SA
• BP Plc

Liquefied Petroleum Gas (LPG) Price Trend

North America

In the US market, Liquefied Petroleum Gas (LPG) prices continued to decline all through 2022. The significant gain in the LPG domestic supply in the US has lowered the US import rates and made America one of the most significant LPG exporters worldwide. In addition, the US demand for home heating and agriculture stayed frail, additionally relaxing the LPG prices in the US. In spite of the growing interest by the Asian market in US exports because of competitive prices, it appears to hold no effect on the LPG domestic prices during the end of 2022. Hence, the lpg production cost remained invariable as well. 

Europe 

At the beginning of 2022, Europe experienced a declining lpg price trend. Europe has succeeded in replacing imports of Russian Gas. The stable LPG supply from Northern Africa and the Middle East countries helped relax the LPG prices in Europe during the end of 2022. The substantial LNG inventory levels, which are competitive energy, also pushed back the demand for LPG. During the end of 2022, the LNG prices rose due to the rising demand for LNG in Asian markets, incidentally boosting the LPG demand in Europe.

APAC

India’s LPG prices dropped continuously throughout 2022 due to Russia’s ample upstream crude oil supply. In India, industrial crackers favoured Naphtha as a feedstock due to its cheap prices in the Asian regions, which lowered the LPG demand in the Indian market. The LPG prices in China plunged as a result of a stable upstream crude oil supply from Russia; however, the challenging hike at the end of the year due to the mid-autumn festival stimulated the price in September.

As per Procurement Resource, LPG is a crucial energy resource with several applications, primarily in the automotive sector. Moreover, owing to its being more environmentally friendly, it is widely preferred over other energy sources, boosting its demand. Hence, sourcing liquified gas is essential, giving rise to the need for a procurement expert like Procurement Resource, where our industry experts guide you through your business requirements.