Liquefied Petroleum Gas Market Size, Share & Industry Analysis, By End User (Domestic, Commercial, Agriculture, Industrial, Transport, Refinery Fuel, and Chemical), By Source (Natural Gas Liquid and Crude Oil), and Regional Forecasts, 2021-2028

The global liquefied petroleum gas market size was valued at USD 128.48 billion in 2020 and is projected to grow from USD 129.17 billion in 2021 to USD 211.96 billion in 2028, exhibiting a CAGR of 7.3% during the forecast period. The market is surging due to expanding residential and commercial applications, the transition towards cleaner energy sources, government initiatives, and the versatility of LPG, driving market growth.

The impact of COVID-19 globally has been unmatched and staggering, with liquefied petroleum gas witnessing a negative demand amid the pandemic across all regions. Based on our analysis, the global market outlook exhibited a decline of -2.22% in 2020 as compared to the average year-on-year growth during 2017-2019 time period. The rise in CAGR during the market forecasts is attributable to this market's demand and growth rate, returning to pre-pandemic levels once the epidemic is over.

Liquefied petroleum gas, also known as propane, is a flammable hydrocarbon gas used commonly as a non-toxic, sulfur-free fuel. It comprises propane (C3H8) and butane (C4H10) with small concentrations of other hydrocarbons. The easy storage of LPG makes it a highly portable fuel and versatile source of energy for industries located in areas where pipe gas supply is not available. It is preferred over several other energy fuels since it burns with lower sulfur and carbon emissions and thus is environment-friendly. LP gas is commonly used in process industries to fuel the boilers for generating steam and boiling water. It is also used as a household cooking gas due to its high flash point and a clean fuel with low emission of GHGs as compared to other fuels. LPG is produced by refining natural gas or crude oil which is obtained from the extraction of fossil fuels. The gas is stripped from wet natural gas stream produced as a co-product from oil refining during natural gas processing. It is usually transported within LPG cylinders and stored as a liquid under moderate pressure.

The critical factor that positively impacts the market is the augmenting growth in the automotive industry and the increasing requirement for energy-efficient fuel. Furthermore, widespread LPG adoption by domestic end-users is providing a boost to the market growth in the region. LP gas mainly serves as a feedstock for petrochemical for ethylene production through the hydrocarbon cracking process and syngas production through steam conversion. In line with this, shifting consumer preference from high-cost conventional fuels such as petrol and diesel to low-cost LP gas also favors market growth. Additionally, the increasing utilization of LPG by the industrial and commercial sectors is another growth-inducing factor.

Blockades in Supply Chain Harmed Global LPG Market Growth Amid COVID-19

Like other industries, the liquefied petroleum gas industry was challenged by the COVID-19 pandemic. Restaurants relied on propane-fueled heaters to keep the diners fed and employees working after restrictions on indoor dining compelled them to serve meals outdoors. Healthcare workers depended on propane-fueled heaters as they performed COVID-19 tests on motorists in parking lots. Millions of people counted on LPG to keep businesses running and homes comfortable. However, the pandemic affected the LP gas industry less due to the significant role it plays as an essential energy commodity in the residential cooking sector and as a feedstock in the petrochemical industry. As a result, the global supply of gas continued its upward trend, increasing demand.

LATEST TRENDS

Increasing Demand for Autogas is Augmenting the LPG Market Growth

Global consumption of autogas has increased tremendously over the last two decades and reached a new level of 27.1 million tonnes in 2019. The upheaval caused by the COVID-19 crisis resulted in a significant fall in the consumption of autogas with other transport fuels in 2020. The autogas fleet continues to grow tremendously, with almost 27.8 million autogas vehicles used actively worldwide. The share of the gas in total consumption of automotive-fuel varies widely among countries, ranging from 0.03% in the United States to over 25% in Ukraine. The tremendous disparity in the success of autogas in competing against gasoline, diesel, and other conventional automotive fuels is explained mainly by differences in government incentive policies. The primary reason why many countries’ governments are actively encouraging autogas and other alternative fuel is the environment. Autogas outperforms gasoline, diesel, and some other alternative fuels in most studies comparing environmental performance conducted around the world. These factors are anticipated to augment the global market.

Increasing Emphasis on Utilization of BioLPG

BioLPG, also called renewable propane and biopropane, is propane produced from renewable feedstocks such as plant and vegetable waste material. BioLPG is, therefore, a clean-burning fuel with negligible impact on air quality and also a low-carbon alternative to business benefits from fuel switching to oil and coal with a long-term role in the energy mix.

Fostering a solid liquefied petroleum gas market can provide a platform for a sustainable transition to bioLPG, a chemically indistinct yet inexhaustible type of conventional LPG. BioLPG is progressively coming to market across Europe as a direct renewable replacement for liquefied petroleum gas in growing volumes, with several of the largest companies having defined 100% sustainable targets. BioLPG has a lower carbon intensity of around 70-80% lower than oil and can be utilized in existing LPG appliances and storage units, allowing for a cost-effective pathway to decarbonization for industrial and commercial businesses.

France and the U.K. signed historic net zero emission targets into law during 2019 with other European countries and the European Union moving in this direction. These factors, including implementing government policies to promote BioLPG as a sustainable renewable fuel, are projected to drive the market further.

DRIVING FACTORS

Increasing Utilization of LPG in Transportation as an Alternative Fuel to Augment Growth

Autogas is the alternative name for automotive liquefied petroleum gas – that is, LP gas is used as an automotive transport fuel. Autogas is the most widely utilized non-blended alternative to conventional oil-based transport fuels, gasoline, and diesel, in terms of its fleet size. Several countries have well-developed autogas markets. Consumption of autogas globally has increased steadily over the last two decades, reaching a new level of 27.1 million tonnes in 2019 with an increase of 1% over the previous year. Demand has nonetheless slowed in recent years, partly because of improvements in fuel economy and a contraction of the autogas fleet in some major markets. Trends differ markedly by country, with some markets growing strongly in 2019, while others declined. The global pandemic caused by the economic upheaval caused by the COVID-19 crisis is expected to result in a significant short-term fall in the consumption of autogas alongside other transport fuels in 2020. These all factors are expected to augment the demand for this gas during the market forecast period.

Increasing Government Initiatives and Support for LPG Adoption to Aid Market Dynamics

With the rising focus on GHG emissions reduction and ensuring sustainable energy for everyone, the usage of LP gas has been growing globally across different sectors. There has been noteworthy support from the government in the form of initiatives and subsidies to further boost the adoption of LP gas. The government of India's initiatives targets subsidies more effectively through their “PAHAL” scheme, which puts subsidies directly into consumers' bank account who are entitled to subsidies. This scheme has been backed up by a ‘give it up’ campaign and invites consumers who can pay the market price for LPG to give up buying subsidized products voluntarily. As a result, LP gas may become an attractive alternative fuel to an increasing number of applications, and this factor is projected to augment the market during the forecast period.

RESTRAINING FACTORS

Emphasis On Zero Carbon Emission, Clean Renewable, and Biofuels to Hamper Growth

The 1970’s oil-price shocks provided the initial impetus for the development of alternative automotive fuels, as countries sought to reduce their dependence on imports of crude oil and refined products. Environmental concerns have since overtaken energy security as the principal driver of government policies to promote such fuels, as they are generally less polluting. In recent years, research and development of alternative automotive-fuel technology have focused on fuels based on oil and natural gas, biofuels derived from vegetable matter such as ethanol or biodiesel, electric vehicles (EVs), and hydrogen-based fuel cells. Plug-in and pure battery EVs are now widely commercialized, but their uptake rate remains constrained by their high cost and limited mileage. The supply of ethanol and biodiesel has risen sharply, but both fuels are usually blended with conventional gasoline and diesel for sale to end-users. However, the scope for biofuel production using traditional technology is likely to be limited by competition for land to grow food crops.

SEGMENTATION

By End User Analysis

Owing to Maximum Utilization of LPG Globally, Domestic segment Holds a Significant Share Market

Based on the degree of utilization in the application segment, the market by end-user globally is segmented into domestic, commercial, agriculture, industrial, transport, refinery fuel, and chemical. The worldwide utilization of LP gas continues to grow every year, with most of it (42.5% in 2018) being used in the domestic or residential sectors for cooking and heating water and homes. In developing countries, LP gas contends against traditional fuels such as wood, charcoal, and coal in the residential sector. These traditional fuels are often sold to consumers in small quantities as their disposable incomes are limited. The section hindrance for introducing LPG to these consumers can be a challenge. The Internet of Things (IoT) is creating business models that allow small quantities of the gas to be sold to households with limited disposable income. IoT has introduced some exciting examples, such as smart valves that can now be operated from smartphones to allow small quantities of LP gas to be purchased via internet banking.

These business models are anticipated to drive the adoption of LP gas in domestic applications. LP gas is also used as a feedstock for the chemical industry to manufacture plastics and synthesize olefins such as ethylene, propylene, butene, and acrylic acid. LP gas is already a leading alternative transportation fuel to gasoline and diesel, with over 26 million vehicles running on LP gas (autogas) today. Autogas significantly improves urban air quality, especially black smoke (particulate matter or PM), NOx, and reduces CO2 emissions from transport. Reducing the environmental impact of road transport drastically in the face of rising demand for mobility will not be possible without a major shift to clean alternative automotive fuels. This factor is the major driver for the rise in demand for liquefied petroleum gas in the transport segment.

There are multiple applications for LP gas in the Industrial sector where its clean-burning properties and hot flame can be utilized. Industrial applications include powering forklifts, aluminum dye-casting, and other metalworking, ceramics, distillation, brick and cement drying, food processing, and glass production. The agriculture sector is important to the LP gas industry as it presents consumers with a modern energy option for those located beyond the reach of natural gas piped networks and sufficiently robust electricity grids. With its portability and flexible supply chain, LP gas is an essential instrument to facilitate rural development. It is anticipated to propel the development of the agriculture segment in the market. Major applications include crop drying, poultry breeding, thermal desiccation, sanitation, and incineration.

By Source Analysis

Natural Gas Liquid To Maintain A High Share Due To Low Cost of Extraction Process

Global liquefied petroleum gas production from natural gas is much higher in volume as compared to the quantity obtained from the extraction of crude oil. The petroleum reserves extracted from the earth's crust contains a mixture of propane and butane. The central portion of the gas produced globally is removed from natural gas while the rest is produced during crude oil processing in refineries. LP gas produced from natural gas does not require an oil refinery. It needs a gas separation facility that can extract the gases necessary to form the LP gas. Thus, the extraction from natural gas is more economical than LP gas production from crude oil in refineries, which will drive the growth of the natural gas liquid segment during the forecast period.

REGIONAL INSIGHTS

The market has been analyzed across major regions, including North America, Europe, Asia Pacific, Latin America, the Middle East, and Africa. Asia Pacific is the largest market for LP gas due to the high adoption of LP gas as a primary fuel for cooking and heating water at homes. There are abundant supplies of LP gas, and the forecasting numbers predict a sustained period of low prices barring any major political disruption. The chemical sector has seen tremendous growth in the region in recent years, utilizing this gas as the major feedstock in synthesizing various chemicals and plastics. The autogas (LP gas as a transport fuel) market has developed more quickly in Asia Pacific. Governments have shown a robust and long-term policy commitment to promote LP gas as a transport fuel. This factor is also driving the liquefied petroleum gas market.

Europe is the second most dominant market and remains one of the regional powerhouses for LP gas. Still, in recent years much of the growth has come from central and eastern Europe rather than the longer-established markets in the northwest and south Europe. LP gas is the key off-grid heating fuel for Europe. Statistical evidence is beginning to emerge that shows a switch to LP gas could be underway in some markets, especially in the light industrial sector. The creative marketing efforts from distributing firms in the region are determined to commercialize new uses for LP gas, especially as boiler fuel. Analysis in the region’s market also has shown increased use of autogas in the transportation sector. Implementing effective autogas incentive policies is underway, helping to make the fuel more competitive against gasoline and diesel, giving a strong financial incentive for an end-user to switch to autogas.

Following Europe, North America is seen as a substantial growing region in the market liquefied petroleum gas, with the U.S. as the significant LP gas exporter. The U.S. produced around 234 thousand metric tonnes of LP gas from natural gas and 10 thousand metric tonnes from its refineries during 2018. According to the Energy Information Administration, U.S. dry natural gas production in 2020 was about 33.4 trillion cubic feet (Tcf), an average of about 91.4 billion cubic feet per day, indicating natural gas as the primary source for LP gas production. The region’s market is distributed among various sectors, with each segment having a fair share, including agriculture, refinery fuel, and industrial leading by the domestic and chemical segments.

The GCC countries are the major contributors to the liquefied petroleum gas market share of the Middle East and Africa region. The Middle East has a surplus of petroleum products; hence, the use of gasoline for automobiles is predominant in the region. Since gasoline results in carbon emissions, the Middle East is expected to grow on autogas. Meanwhile, although Africa accounts for a smaller market share, the region is mostly developing and is expected to grow on commercial/residential applications. Latin America is also a substantial growing region, owing to the region's increasing investment in alternative fuel. The exponential increase in the global energy demand and the building of new establishments to serve the abrupt population outburst and rapid urbanization is projected to support the growth of the global market.

KEY INDUSTRY PLAYERS

BP Plc, Exxon Mobil Corporation, ConocoPhillips, and Abu Dhabi National Oil Company (ADNOC) are Expected to Lead the Way with R&D Investments and Wide Customer Reach

The market is moderately fragmented, with different key players operating at the international level. The industry participants are significantly focusing on the exploration and production of natural gas with enhanced operational characteristics to fortify their global foothold. Considering all the scenarios, BP Plc, Exxon Mobil Corporation, ConocoPhillips, and Abu Dhabi National Oil Company (ADNOC) held significant market share in the global market due to their better-performing extraction processes and established supply chain. They are expected to stay as the market leaders in the coming years.

LIST OF KEY COMPANIES PROFILED:

• BP (U.K.)


• ExxonMobil (U.S.)


• ConocoPhillips (U.S.)


• ADNOC Group (UAE)


• Qatar Petroleum (Qatar)


• NOVATEK (Russia)


• Gazprom (Russia)


• SINOPEC (China)


• Reliance Industries Limited (India)


• Shell (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• June 2021- Astomos Energy Corporation signed an agreement with Shell International Eastern Trading Company (Shell) to purchase a carbon-neutral liquefied petroleum gas cargo for delivery in Japan. The large gas carrier (VLGC)-size LPG cargo is the world’s first carbon-neutral LPG. According to Shell, the CO₂e lifecycle emissions of this product have been offset with verified nature-based carbon credits. In this agreement, credits from Shell’s global portfolio of nature-based projects will be used to offset lifecycle CO2e emissions generated across the value chain from production to consumption (combustion), including transportation. The company’s nature-based projects protect, transform or restore land and enable nature to add oxygen and absorb CO2 emissions from the atmosphere.


• March 2021- Abu Dhabi National Oil Company (ADNOC) signed an agreement to supply Indonesian national oil company Pertamina with liquefied petroleum gas and sulfur in a four-year deal worth around USD 2 billion. As part of the Indonesia-Emirates “Amazing Week 2021” the LPG and sulfur sales contract will last for 4 years with an annual contract value of around USD 500 million. The agreement also included the condition that the amount may change following fluctuations in the price of these commodities on the global market.

REPORT COVERAGE

The research report on this market highlights leading regions worldwide to offer a better understanding of the user. Furthermore, the report provides insights into the latest industry trends and analyzes technologies deployed at a rapid pace at a global level. It further highlights some of the significant growth-stimulating factors and restraints, helping the reader gain in-depth knowledge about the LP gas sector.

Report Scope & Segmentation