Gas for households - LPG for cooking as first step Ho Sook Wah Secretary General Malaysian Gas Association 2013 PETROLIAM NASIONAL BERHAD (PETRONAS) All rights reserved. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or otherwise) without the permission of the copyright owner. PETRONAS 2013 1
Before the 1970s, the main fuel for cooking were charcoal, wood and kerosene Charcoal Wood Kerosene ABCD/CSP/PN PETRONAS 2013 2
LPG is derived from oil and gas value chain Upstream Downstream Products OIL Refining Condensates Petroleum Products Petrochemical Sales Gas Transportation Sector : Gasoline Jet Fuel Diesel Fuel Oil Industrial Sector: Ethylene MTBE Methanol Polyethylene Propylene VCM / PVC Exploration, Development & Production GAS Processing LPG Power Sector : Methane Diesel Fuel Oil Commercial & Residential Sectors LNG Liquefaction Export ABCD/CSP/PN PETRONAS 2013 3
LPG is a BYPRODUCT LPG is produced as a byproduct of: Oil production (via the processing of associated gas) Gas production (via the processing of non-associated gas including LNG) Refining Therefore, LPG is a supply-driven market in which demand must adjust to match supplies. LPG production tends to increase quickly when one or more of the above industries is expanding quickly. ABCD/CSP/PN PETRONAS 2013 4
Benefits of LPG LPG is used to replace other traditional fuels such as wood, charcoal and kerosene. It has complete burn of true blue flame that ensures the heat is spread across the whole pan. Faster cooking reduces gas usage thus making it more economical, environmentally friendlier and healthier for everyone. Burns with cleaner flame without burning pots and pans. Thus making washing up a breeze. ABCD/CSP/PN PETRONAS 2013 5
Technical Specification of LPG Composition of Propane-C3 dan Butane-C4: 30% Propane and 70% Butane Physical properties : Colourless and odorless - (an odorant; ethyl mercaptan was introduced to create smell) Density (kg/l) : 0.4149-0.5952 Calorific value (kcal/kg) : 11800 Vapour Pressure : 6 7 bar Boiling point of LPG : Propane -42C and Butane -60C PROPANE 29.5% BUTANE 70% 0.5 % Ethane Pentane Nitrogen Sulphur Water ABCD/CSP/PN PETRONAS 2013 6
LPG Cylinders are designed with maximum safety and easy handling LPG comes with 12-14 kg cylinders for household use and 50 kg cylinders for industries Cylindrical shape offers easy handling, retrieval and storage Offers maximum safety in case of leakage as LPG vaporize in the air ABCD/CSP/PN PETRONAS 2013 8
There are some potential dangers of LPG LPG is heavier than air possible explosion if mixture of LPG and air is within explosive limit and there is an ignition source. Suffocation LPG displacing air, thus lowering the level of oxygen. Use of an odorant to detect leakage of LPG. Incorrect use of LPG can result in explosions, fires, lost of property and most importantly, loss of lives. Do not neglect issues like leaking gas cylinders or tubes, damaged regulators, incorrect method of storage of LPG cylinders, etc. ABCD/CSP/PN PETRONAS 2013 9
A Brief History of LPG in Malaysia From Fuel for the Elite To Fuel for the Masses Prior to 1980s 1980s-1990s 2000s- current Agricultural-based economy with low per capita income. Cooking uses traditional fuelscharcoal, kerosene etc. LPG production from refineries is mainly for export market; domestic demand limited IOCs (i.e. Shell and Esso) dominates the domestic market Malaysia embarked on industrialization programme to uplift the economy PETRONAS entered the LPG business to solve LPG shortages in Northern Peninsula Government introduced APM mechanism to provide price stability and ensure sufficient margin to players PETRONAS embarked on PGU pipeline and GPP projects to monetize the gas resources offshore Peninsula Improved infrastructure - North South Highway project and enabled greater transportation of LPG LPG became the fuel of choice because of availability, affordability and environmental benefits PETRONAS achieved 50% market share ABCD/CSP/PN PETRONAS 2013 10
LPG demand took-off as a result of higher standards of living Per-capita GDP vs. LPG Demand RM Thousand 30000 000 bpd 120,0 25000 100,0 20000 80,0 15000 60,0 10000 40,0 5000 20,0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 GDP Percapita LPG Demand (RHS) - Source: FGE 2013, IMF PETRONAS 2013 11
To ensure efficient supply, Malaysia has a developed LPG supply infrastructure South China Sea Kota Kinabalu Pulau Langkawi Bayan Lepas Prai Kertih Kerte P E N I N S U L A R h M A L A Y S I A Labuan B R U N E I Sandakan S A B A H Tawau Kuala Lumpur Port Kelang Subang P. Dickson Melaka Senai Senai Kuantan Pasir Gudang Sibu Kuching Bintulu Miri S A R A W A K Kalimantan (Indonesia) Refinery 3 5 Current Capacity (bpd) 314,300 557,300 Bottling Plants 9 LPG Extraction Facility 2 21 PETRONAS 2013 12
LPG price in Malaysia is heavily subsidized by the Government for domestic consumers Price Breakdown for LPG 14 kg Actual price = RM 54.39 Consumer price = RM 26.60 Subsidy = RM 27.79 RM/kg 3 2,5 2 1,5 1 0,5 0 Regional Price Comparison for LPG 2,73 1,86 1,9 Thailand Indonesia Malaysia ABCD/CSP/PN PETRONAS 2013 13
Stiff domestic competition have seen the consolidation of major players over the years Previous Current ABCD/CSP/PN PETRONAS 2013 14
In summary Key takeaways Abundant Supply Availability of oil and gas reserves provide incentives to utilize indigenous resources Improve standards of living Rising affluence and living standards shift consumer preference towards more cleaner fuels Infrastructure Well developed infrastructure to carry and transport LPG to consumers Government Support LPG is heavily subsidized by the Government for domestic use.
The End PETRONAS 2013 16