The production of liquefied petroleum gas increased by 15% in the last seven months of the previous fiscal (Aug. 23, 2021-March 20) compared with the same period of the year before, managing director of the National Iranian Gas Company said.
The rise in output also increased the export of the product in the seven months,” Majid Chegeni was also reported as saying by the Oil Ministry’s news agency Shana.
LPG is a valuable product in the natural gas production chain which, in addition to being used as a fuel, is also used to feed many industries, including petrochemicals, he added.
The official noted that despite the very high intrinsic value of this product, unfortunately in recent years, part of the LPG in gas refineries was injected into the national gas network and burnt along with natural gas.
“However, one of the priorities of the current administration is to avoid wasting valuable compounds, including LPG,” he said.
“By taking fundamental and infrastructural measures such as setting up Siraf Pars Port, completing the remaining units in South Pars refineries and pursuing active marketing for exporting LPG, a significant amount of LPG is saved. So, despite a 15% increase in its production during the period, the amount of LPG burned during this period declined by 10%.”
Chegeni stressed that as a result of these measures, the amount of LPG exported between Aug. 23, 2021, and March 20, 2022, reached 2,608,000 tons which, compared with the same period of a year ago, shows a rise of about 15%.
LPG is produced by Bandar Imam Petrochemical Company in the southwestern Khuzestan Province and Fajr Jam Gas Refinery in the southern Bushehr Province.
Currently, about 30,000 tons of LPG are produced in the country per day. Of this amount, about 6,000 tons are distributed daily in the domestic sector and the remaining could be used either as fuel in cars or exported.
There are two million households, mostly in the southern provinces of Sistan-Baluchestan and Kerman, which are not linked to the national gas grid and need LPG for cooking and heating.
The liquid gas can also be used for vehicles in the public transportation sector instead of diesel. Its advantage is that it is a cleaner fuel.
LPG accounts for 2% of the fuel used in the domestic transportation sector. There are at least 1.2 million cars equipped with LPG kits across the country.
Although adding LPG to the fuel basket will reduce gasoline consumption by 15 million liters per day, which can be exported, the Oil Ministry is against it.
Since each ton of LPG can be sold at $500 in international markets and there is high international demand for it, it is more profitable to export it. Iran's LPG exports have been around 500,000 tons per month recently.
Iranian exporters aim to increase LPG exports when the US administration lifts sanctions that have limited shipments from the country's petrochemical plants and gas refineries.
Global Status
Globally, the LPG industry is expanding due to higher demand from various quarters. Furthermore, from 2021 to 2030, the implementation of strict government environmental rules will be a major driver of market growth. However, the LPG market's growth is being hampered by the rapid development of the renewable energy sector.
Increasing car gas usage, as well as huge semi-urban and rural populations in Africa, Latin America and Asia-Pacific, is driving LPG demand. This product is used as cooking fuel by the indigenous population in these areas.
In India, for example, LPG is used as cooking fuel by over 80% of households. Initiatives such as streamlining subscription processes and payments, cylinder delivery, and cylinder subsidies to wean people off hazardous cooking fuels like firewood and coal have increased the use of LPG.
However, the combustible nature of LPG is a key stumbling block for the market. As a result, it is kept in enormous pressurized cylindrical or spherical tanks. Its flammability also adds to the expenses of storage, transportation and distribution to end-users. Another aspect that has a negative impact on the market is the price volatility of crude oil feedstock, which has hampered market growth.
The expansion of marine commerce of this fuel is predicted to be driven by the implementation of petrochemical projects, such as propane dehydrogenation project and steam crackers, as well as new production lines.
Other LPG-producing regions, including Canada, Australia and Angola, are projected to launch new gas exploration and production projects. This is estimated to support gas exports, creating market opportunities worldwide.
